Gagne was the Flyers' first-round draft pick in 1998 and racked up 259 goals (524 points total) in 664 games for the Flyers from 1999-2010, when he was dealt to Tampa Bay for salary cap reasons.
This season the 32-year-old has compiled just five assists in 11 games for Los Angeles following a concussion-plagued 2011-12 campaign.
In return, the Kings acquired either a third or fourth-round draft pick, depending on whether the Flyers make the playoffs, the Los Angeles Times reported.
"Simon is an experienced veteran who will help us in a lot of areas," Flyers General Manager Paul Holmgren said in making the announcement. "We are glad to have him back."
Gagne is the Flyers' 10th-leading all-time point producer.
Handler slams Piers Morgan: 'You're a terrible interviewer'
Ohio bar shooting arrested, charged with murder