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Former England captain David Beckham will make about US$1 million a week in a five-year deal with American MLS side Los Angeles Galaxy.
"This week Real Madrid asked me to make a decision regarding my future and the offer to extend my contract for a further two seasons," said Beckham.
"After discussing several options with my family and my advisers to either stay here in Madrid or join other major British and European teams I have decided to join LA Galaxy and play in the MLS from August this year.
"I would like to thank supporters and the people of Madrid who have made my family and I so welcome in my time here making this an extremely difficult decision to make.
"I have enjoyed my time here enormously and I am extremely grateful to the club for giving me an opportunity to play for such a great team and their amazing fans."
Real Madrid confirmed that Beckham would not renew his contract with the club.
The 31-year-old, who joined Real from Manchester United in June 2003, is the most famous player to sign up for Major League Soccer since it began in 1996.
He is also the biggest name player to move to club football in the US since the likes of Pele, Franz Beckenbauer and Johan Cruyff played in the long-defunct North American Soccer League in the 1970s and early 80s.
His deal is reported to be one of the biggest in global sport with Beckham set to earn more than US$250 million ($368.73 million) over the duration of his contract.
LA Galaxy had made public their interest in Beckham, who runs a football academy that shares its home with the team and who has close links to the Anschutz Entertainment Group which owns the club.
"David Beckham coming to MLS might be viewed by some as one of the most important moments for soccer in this country and perhaps the history of professional sport," MLS commissioner Don Garber said.
"David transcends the sport and is a cultural icon. David is clearly one of the most recognisable athletes in the world. People are going to feel really good about David Beckham spending the rest of his career in the US."
The news ends months of speculation about the future of the midfielder whose contract with Real expires at the end of the season.
Having been first choice in the Real Madrid starting lineup since he moved to Spain, Beckham lost his place following the arrival of Italian coach Fabio Capello.
He has only started five of Real's 16 league games this season and was known to be frustrated with his lack of opportunities.
The former Man U player said he was now inspired by the challenge of cracking the American market.
"I am proud to have played for two of the biggest clubs in football and I look forward to the new challenge of growing the world's most popular game in a country that is as passionate about its sport as my own."
But he insisted he would be giving his all for Real Madrid until the end of the season to try to win the major trophy that has eluded him since he joined the club in 2003.
"For the rest of this season I will continue to give 100 per cent to my coach, teammates and fans and I believe Fabio Capello will bring this club and its supporters the success they truly deserve."
- REUTERS
