Loaiza is 0-0 with a 3.00 ERA in three relief appearances. The 36-year-old signed a one-year contract with Chicago on June 4 after being cut by the Los Angeles Dodgers last month.
"We can't use him the way we want to use him," manager Ozzie Guillen said. "Right now, we're not in a situation where we can ... find anything for him to stretch innings. That's why we made the decision."
The White Sox will send him to the minors in the next few days to build his arm strength and prepare him for long relief and possible spot starts. Pitching coach Don Cooper said Loaiza is scheduled to start June 16 and June 21 for Triple-A Charlotte and will be limited to three innings and 60 pitches.
"We've got to get him work," Cooper said. "We've got to get him more ready to be able to perform closer to the level that we had seen before. We're not expecting him to do what he did in (2003), but we are expecting him to be a guy with savvy, experience, touch-and-feel pitch ability. Right now, it's not quite right."
Loaiza made 55 starts for the White Sox from 2003-04. He was the AL's starting pitcher in the 2003 All-Star Game at U.S Cellular Field, and went 21-9 with a 2.90 ERA while leading the league in strikeouts.
He was traded to the New York Yankees on July 31, 2004, for Jose Contreras. He has struggled since with problems in both shoulders.
The move to the DL was retroactive to Thursday.
With Loaiza out, Chicago recalled right-hander Adam Russell from Charlotte, where he is 3-0 with a 1.74 ERA and 24 strikeouts in 21 relief appearances. He was with Chicago from May 2-5 but did not pitch.