Pauley worked three innings in Monday's game, hitting a batter and allowing a grand slam to Royals third baseman Mike Moustakas.
The 29-year-old Pauley, who the Blue Jays claimed off waivers from the Angels on June 20, made five appearances with Toronto and allowed at least one run in each of his past three outings. Pauley has a 6.48 ERA and 1.92 WHIP.
To fill his spot on the 25-man roster, the Blue Jays selected the contract of righty Drew Carpenter from Triple-A Las Vegas.
Over 21 games, including 12 starts with the 51s, Carpenter went 6-3 with a 3.38 ERA and 56 strikeouts over 74 2/3 innings.
Carpenter, who began the year in the bullpen, has allowed two earned runs or fewer in seven of his past 10 starts.
Selected in the second round of the 2006 First-Year Player Draft by the Phillies, Carpenter has appeared in 17 career Major League games with Philadelphia and San Diego.