ESPN's Adam Schefter reported Houston will receive $24 million over two years from the Colts.
Houston had spent the first eight years of his career with the Kansas City Chiefs, but he was released before the start of free agency in a money-saving move. According to Kevin Patra of NFL.com, the team freed up $14 million in cap space for 2019 with the transaction.
The team had initially tried to trade him but couldn't find a taker for his high salary, per Schefter.
Still, there was plenty of interest on the open market with at least six teams engaging with him once he hit free agency, according to Jason La Canfora of CBS Sports.
This level of demand makes sense based on his production throughout his career.
The linebacker has totaled 78.5 sacks in 102 NFL games, including a league-leading 22 in 2014. He has earned four Pro Bowl selections and is consistently one of the most dangerous pass-rushers in the NFL.
Although he has slowed down a bit lately, the 30-year-old remains an effective player with nine sacks in 12 games last year and 9.5 sacks the season before. He also forced five fumbles, recovered three, and added the fourth interception of his career.
Pro Football Focus broke down his level of play on the field during his career:
While age shouldn't be too much of a concern as he has remained an impact player, his injury history has been a problem.
Houston missed four games last year due to a hamstring problem and hasn't played a full 16-game season since he was an All-Pro in 2014. He has missed 21 total games over the last four years.
As good as the linebacker can be when healthy, he doesn't help anyone when he is on the sidelines.
Still, the Indianapolis saw enough value to complete the deal.
Houston had spent his entire career to this point with the same franchise while mostly playing under the same defensive coordinator (Bob Sutton), but he will know how to make an adjustment in a new city.
If he can stay healthy, though, he should be a difference-maker for the defense in 2019 and possibly beyond.
Houston is an interesting fit for the Colts, who primarily run a 4-3 scheme. He's played inside linebacker at points in his career, but his best success has come as an edge-rusher.
Given Houston's age and injury history, though, the Colts can find a way to work him into games exclusively in pass-rushing situations that will maximize his value.