The move to put Gee on the 40-man was expected, and it needed to be done by midnight ET on Tuesday, otherwise Gee could have left and become a free agent. He is a candidate for a bullpen spot on Kansas City's 25-man roster.
Gee, who was the Mets' Opening Day starter in 2014, has impressed the Royals' coaching staff with his bullpen sessions and in Spring Training games (1.80 ERA).
Gee said on Monday that he trusted that the Royals would do the right thing.
"One of the main reasons I signed here is the great reputation this organization has in how they treat people," he said. "They've been tremendous. But as far as [the opt-out] goes, that's just something I leave up to my agent."
Gee, 29, signed a Minor League contract with Kansas City in the offseason. If he makes the 25-man roster, his base salary would be $2 million. Gee also can earn up to $3.3 million in bonuses for games started and $700,000 for relief appearances.
Gee's best season was in 2013, when he went 12-11 with a 3.62 ERA.