Scaife was the Titans' leading receiver in 2008 with a career-high 58 catches, a number that ranked him seventh among NFL tight ends.
The franchise tag means Scaife will earn $4.46 million for 2009, the average salary of the five highest-paid players at his position.
Another team can attempt to sign Scaife, but the Titans would have the chance to match any offer or receive two first-round draft picks as compensation.
The Titans also have until July 15 to reach a long-term contract with him.
Scaife's agent, Kevin Roberson, had said recently that Scaife intended to test the market once free agency starts Feb. 27. Roberson did not immediately return a telephone message from The Associated Press seeking comment.
A sixth-round pick in 2005 out of Texas, Scaife had 561 yards receiving and two touchdowns in 16 games for the Titans last season. He led the team in catches seven times.
He's also proven durable, missing only two games through his first four seasons. He has 170 catches for 1,625 yards with seven touchdowns in his career.
The move came an hour after general manager Mike Reinfeldt said at a news conference to discuss kicker Rob Bironas' new four-year deal that he preferred to wait until close to the deadline before making any move on tagging a player.
"It's a big decision. You need to analyze all the possibilities. Again, I'm of the opinion you wait to the last moment to do it. I don't see the advantage of doing it early," Reinfeldt said.
Using the franchise tag on Bironas had been a possibility until they agreed on a four-year, $12 million deal Wednesday night.
The Titans still have 12 other players who become free agents on Feb. 27, with defensive tackle Albert Haynesworth wanting to become the league's highest-paid defensive lineman after being slapped with the franchise tag for 2008. He played the season for $7.92 million.
Kerry Collins is another player the Titans want to keep around, but the franchise tag for quarterbacks is $14.65 million with even the transition tag $12.44 million.
Reinfeldt said he still plans to talk with Haynesworth's agent sometime during the NFL Combine in Indianapolis. The general manager said the news that Haynesworth plans to test the free agent market doesn't affect those planned talks with agent Chad Speck.
"We'll still get together with Chad and toss around different scenarios," Reinfeldt said.