Several media outlets reported Monday afternoon that Penny was close to signing a deal with the Giants after clearing waivers, and the club confirmed that the two sides agreed to a Minor League deal later that night.
The Giants already have a formidable starting rotation, with Matt Cain, Tim Lincecum, Barry Zito and Jonathan Sanchez. They also expect to get Randy Johnson back in the bullpen at some point in September as he recovers from a left shoulder strain.
Penny is expected to make his San Francisco debut on Wednesday against the defending World Series champion Phillies, The AP added. He will join the Giants in Philadelphia on Tuesday, and the team will then have to make a move to purchase his contract and add him to the Major League roster.
Penny was put on waivers last week by the Red Sox -- who gave him a $5 million contract this offseason -- but wasn't claimed. They beat a Monday deadline for Penny to sign with a team if he hoped to be on a postseason roster.
In 24 starts for Boston this year, the 31-year-old went 7-8 with a 5.61 ERA and posted an ERA of 8.31 in four August starts.
For his career, Penny has 101 wins and a 4.18 ERA spanning 10 seasons. A two-time All-Star, Penny had his best year in 2007, when he went 16-4 with a 3.03 ERA with the Dodgers. Last season, the Oklahoma native was limited to 19 games (17 starts) and a 6.27 ERA because of shoulder problems.
The Giants (72-59) are tied for the National League Wild Card lead after sweeping the Rockies and were six games back of the Dodgers in the NL West entering play on Monday.
Alden Gonzalez is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.