Wood, 33, could help the Yankees secure their setup bridge to closer Mariano Rivera, especially now that Joba Chamberlain has lost his firm stranglehold on the eighth-inning duties. The Yankees have also been offering higher-priority innings to Dave Robertson of late.
"Kerry still has terrific stuff," Yankees general manager Brian Cashman said. "We analyzed his abilities with what we currently possessed and felt we would be upgrading if, in the right circumstance, we were able to acquire him."
Wood was activated by the Indians on Saturday from the disabled list after battling a blister on his right index finger. He began the season on the disabled list with a strained right lat suffered in Spring Training and was activated on May 7.
The veteran has spent 12 seasons in the Major Leagues, and he was 1-4 with a 6.30 ERA in 23 appearances for Cleveland in 2010. The Yankees are hoping to have him in uniform for Sunday's 1:40 p.m. ET game against the Rays at Tropicana Field.
"I'm obviously excited to go and pitch in a pennant race and a chance to get into the postseason and win a championship," Wood said in Toronto. "That's why we all play the game.
"I'm obviously disappointed in my performance this year and my time here in Cleveland. ... I would have liked to hold up my end of the deal better than I did, but in the end, it is what it is."
Outfielder Austin Kearns -- acquired by the Yankees from the Indians on Friday -- said that he laughed when he got off his flight at Tampa International Airport on Saturday, receiving a text message that read, "Woody is right behind you."
Yankees manager Joe Girardi knows Wood well -- he used to flash signals for the hard-throwing hurler when they were teammates for three seasons beginning in 2000.
"It's weird when you have a guy that you've actually caught," Girardi said. "I don't know if it makes me feel younger or I think of him as just being old now. There is a relationship there. I know his family, my wife knows his wife. It's kind of weird."
Wood owns a career record of 81-68 with a 3.71 ERA in 357 games (178 starts) over parts of 12 seasons with the Cubs (1998, 2000-08) and Indians (2009-10). He owns a 4-7 mark with 28 saves (in 37 chances) and a 4.80 ERA in 81 games -- all in relief -- over the last two seasons with the Indians.
Though mainly used as a starter from 1998-2004, Wood has made 179 career relief appearances, going 10-13 with 62 saves in 77 opportunities, a 3.85 ERA and 206 strikeouts in 177 2/3 innings.
"As long as he stays healthy, he's just going to be another legitimate choice for us to play with," Cashman said.
After Saturday's deals were complete, the Yankees designated Chan Ho Park for assignment, optioned Colin Curtis and Juan Miranda to Triple-A and transferred Alfredo Aceves to the 60-day disabled list.
New York also upgraded its bench and designated hitter spots before Saturday's Deadline, swinging deals to obtain Lance Berkman from the Astros and Kearns from Cleveland.