The two are expected to be among the non-roster players Kansas City invites to Spring Training in February.
Rupe, 27, pitched four years for the Rangers. Coats, also 27, played for the Cubs, Reds and Blue Jays.
The Royals also traded infielder Tug Hulett to the Red Sox for a player to be named or cash. Hulett, who was designated for assignment Friday, appeared in 15 games for the Royals and batted .111. In addition, pitcher Julio Pimentel, who missed all last season because of elbow surgery, cleared unconditional release waivers and the Royals said they'd try to re-sign him.
After battling elbow problems for two years, Rupe spent the entire 2008 season in the Texas bullpen. He worked 89 1/3 innings, tying for the big league relief high with the Rays' J.P. Howell, with a 3-1 record and 5.14 ERA. This year, he spent most of the summer with Triple-A Oklahoma City and was tried as a starter, finishing 5-7 with a 6.67 ERA in 24 games (14 starts).
The Royals view him as a reliever.
"He's a guy that can add depth to our bullpen," said Scott Sharp, the Royals' director of Minor League operations. "He started a fair amount this year, but our scouting judgments are that he's better suited to be in the bullpen."
In four years with Texas, Rupe pitched in 70 games -- all but one in relief -- with a 4-2 record and 4.95 ERA. He was a third-round Draft choice by the White Sox in 2002.
Last season, Coats batted .302 with 25 stolen bases in 32 tries and an on-base percentage of .361 for Triple-A Las Vegas. He also was the leadoff batter and center fielder for the gold-medal winning Team USA, managed by Royals coach Eddie Rodriguez, at the World Cup in September.
"He seemed to be an interesting outfield package," Sharp said. "If we were to need an outfielder, he provides us an opportunity not to have to rush a [Jordan] Parraz or a [Jarrod] Dyson or guys we just added to the roster. He's another left-handed bat and creates some depth as a guy who can play all three outfield positions and has speed."
In 10 Minor League seasons, Coats has played 1,049 games with a combined .285 average and 176 steals. He's played in a total of 46 Major League games, batting .193. The Cubs made him an 18th-round Draft pick in 2000.
Other ex-Major Leaguers from outside the organization previously signed by the Royals to Minor League deals this offseason are pitchers Jorge Campillo, Brad Thompson and Bryan Bullington; catcher Edwin Bellorin and infielder Wilson Betemit.
Dick Kaegel is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.