The team is now left with two inexperienced reserves behind Brett Favre after the tough but necessary move.
Favre, who is recovering from the third confirmed concussion of his career, is expected to be the starter for the Packers' upcoming Monday night game against Tennessee. The Packers are attempting to rebound from the first three-game losing streak during the tenure of head coach Mike Sherman.
A 12th-year veteran who has served as Favre's caddie in five of the past seven seasons, Pederson suffered a broken rib and also a fractured transverse process in his back during Sunday's loss to the New York Giants.
The injuries were expected to sideline Pederson, 36, for about six weeks, perhaps longer.
With the roster spot created by the Pederson transaction, the Packers signed free agent Larry Smith, a defensive tackle who was with Green Bay in training camp, to bolster a front four ravaged by injuries this season.
Pederson, who has thrown just 53 passes the past four seasons, acknowledged earlier this week that the back injury, and a trip to injured reserve, might precipitate his retirement. Sherman had hinted Monday that, with Pederson probably unable to pick up a football for six weeks, injured reserve was a strong possibility.
"Where I'm at, in this stage of my career, an injury like this, if it's substantial enough and you end up missing a lot of time, [retirement] is possible," Pederson said.
The loss of Pederson to injury reduces the depth chart behind Favre to Craig Nall and J.T. O'Sullivan, a pair of young quarterbacks who have logged just one regular-season pass attempt between them. It also magnifies the inability of the Packers, despite a number of attempts over the last few seasons, to upgrade the backup position.
Green Bay attempted to address the backup issue this summer by signing Tim Couch, but the former Cleveland Browns starter, who suffered through a sore arm in training camp, was released before the start of the season.
Nall, who completed the first attempt of his career last Sunday as time expired, will serve as Favre's primary backup for now and perhaps the balance of the season. The No. 3 quarterback will be O'Sullivan, the third-year veteran acquired Monday from New Orleans in the trade which sent unhappy cornerback Mike McKenzie to the Saints. His highly regarded mental capacity aside, it likely will take O'Sullivan, who had appeared in just one game with the Saints, a few weeks to assimilate the Packers offense.
Pederson apparently was injured on a third-quarter play in which he scrambled and was hit at the sideline by Giants defensive end Keith Washington. Members of the Packers staff said they were not aware, during the game, of the extent of his injury. Offensive coordinator Tom Rossley acknowledged Monday that the injury hampered Pederson in throwing the ball and that he should have replaced him with Nall earlier in the game.
Of the two injuries, the fracture to the transverse process, a small bone that essentially attaches muscles and ligaments to the spine, was considered the more serious.
In 12 seasons, Pederson has appeared in 100 games with 17 starts. But many of those 100 appearances were as a holder for placement kicks, a key role which will now be filled for the Packers by punter Bryan Barker. In stints with Miami (1993-94), Green Bay (1995-98 and 2001-2004), Philadelphia (1999) and Cleveland (2001), Pederson completed 286 of 522 passes for 2,762 yards, with 12 touchdown passes and 19 interceptions. All 17 of his starts came in 1999 and 2000.
Smith, 29, is a former second-round draft pick of the Jaguars, who spent the first four seasons of his career in Jacksonville. He appeared in 10 games for the Packers in 2003 and registered 12 tackles and 1½ sacks.
Len Pasquarelli is a senior NFL writer for ESPN.com. To check out Len's chat archive, click here.