The Advertising Standards Authority said posters offering a piece of "Spicy Zinger" chicken for 50pence failed to make clear that the deal was open only to people who also bought a complete meal.
The watchdog upheld complaints from three people, saying small print explaining the promotion was not clear enough.
"We considered that referring to the significant condition only in smallprint was likely to mislead consumers about the nature of the offer," the ASA said.
It ordered KFC to state terms and conditions more clearly in future.
KFC, part of U.S. restaurant group Yum! Brands, said the text on the posters was unambiguous. The poster was displayed at 7 000 sites for two weeks and only attracted a handful of complaints, it added.
KFC was behind the advert that drew the most complaints in 2005.
More than 1 600 people complained about a commercial that featured call-center workers singing with their mouths full.