Callaspo was pulled from the lineup less than an hour before the Royals' game in the Bronx against the Yankees, with Wilson Betemit taking his place. Callaspo, 27, was batting .275 with eight homers and 43 RBIs in 88 starts for Kansas City this season. He was a .293 hitter in 317 games for the Royals over the past three seasons.
O'Sullivan will be flying back to meet the team in New York just days after he earned his first win of the season in his first start against the Yankees with six innings of two-hit, two-run ball. The 22-year-old O'Sullivan, a third-round pick in 2005, throws in the low 90s with a developing changeup to go along with his slider. He was 1-0 with a 2.08 ERA in five appearances this season and 5-2 with a 5.15 ERA in 17 career games, including 11 starts, for the Halos.
"We just got an opportunity to get a quality young pitcher in O'Sullivan that we like," general manager Dayton Moore said. "He's got the toughness, the competitiveness and the ability to pitch with command of the fastball. It was just the right time for us to make a move."
"It's weird," O'Sullivan said. "It's the first time I've ever been traded. The goal is to go to a place where they need you, want you, so you can show you're capable of playing at this level.
"I'm trading red for blue. That's all I know right now."
With the trade occurring so close to game time on Thursday, manager Ned Yost said he had yet to consider exactly where O'Sullivan will fit in the Royals' plans.
"It happened so fast right before the game, we haven't really had a chance to sit down and discuss exactly what his role is going to be. I imagine he's going to start," Yost said, although he wasn't sure whether O'Sullivan would get a second shot at the Yankees this week.
The left-handed Smith was 1-2 with a 7.23 ERA in four starts for the Angels' Double-A affiliate at Arkansas. The 21-year-old, a seventh-round pick in 2007, has also spent time in Class A Advanced and Triple-A this year, with a 5-8 mark and 5.53 ERA over 19 starts. Over the course of his professional career, Smith owns a very impressive 3.47:1 strikeout to walk ratio.
Smith will report to Class A Wilmington.
"He's an excellent competitor, good command of his fastball, good breaking pitch," Moore said. "He just turned 21 and he's a kid that was a big part of the deal."
"We got two pretty good arms in the deal," Yost said. "Pitching, you have to get that pitching stocked up so when guys go down like Gil [Meche] went down, like [Luke Hochevar] went down, you've got quality guys you can bring in and not miss a beat."
Callaspo was the Royals' everyday second baseman in 2009, hitting .300 with 11 homers and 73 RBIs, second best on the team. After the offseason acquisition of Chris Getz and a Spring Training injury to Alex Gordon, Callaspo was moved to the hot corner, which Royals brass always considered his best position.
Kansas City was happy enough with Callaspo at third that it had Gordon working in the outfield at Triple-A Omaha -- something Moore said will continue. Yost indicated that Betemit will get the majority of the playing time at third base for now, although Getz, Mike Aviles and Willie Bloomquist can also play third.
"It gives Betemit a chance to play every day, and he's been swinging the bat really well," Yost said. "He did a great job at third base. He's more than adequate over there, and a switch-hitter with power. Betemit's bat in the lineup every day gives us a little but more pop, something we've been lacking a little bit."
The Royals' third baseman of the future is Mike Moustakas, who was just moved up to Triple-A Omaha on July 15. Moustakas, a 21-year-old left-handed hitter, batted .347 with 21 homers and 76 RBIs in 66 games for Double-A Northwest Arkansas.
"There's no timetable for him per se, but we're not putting limitations on him and we'll just going to play it out and see what happens the rest of the year," Moore said. "Right now Mike Moustakas needs to focus on playing in Triple-A and we're evaluating how he meets the challenges in Triple-A."
Callaspo is making $460,000 this season but will be eligible for arbitration -- and thus a significant raise -- at season's end.
The Royals recalled Rick Ankiel from the disabled list to replace Callaspo on the roster for Thursday night's game.
Tim Britton is an associate reporter for MLB.com and Dick Kaegel is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.