Toni Kroos has signed a six-year deal with Real Madrid - ending any hopes Manchester United had of securing the World Cup winner.
Kroos will shortly be presented to supporters and the media at the Bernabeu stadium after undergoing a medical at Los Blancos thus concluding a £24 million move from Bayern Munich.
In a statement on their official club website, Real Madrid said they had "reached an agreement with Bayern Munich for the transfer of the player Toni Kroos."
Bayern chairman Karl-Heinz Rummenigge said: "We would like to thank Toni Kroos for his time here in Munich.
"We enjoyed great success here together. We would like to wish him and his family all the best in Madrid and with Real."
The German midfielder, who will reportedly earn £5.3 million after tax at Madrid, had just one year left on his Bayern contract and his desire to leave last season's Bundesliga winners had alerted Manchester United.
Kroos was instrumental in landing Germany their fourth World Cup in Brazil, scoring twice in the 7-1 semi-final humiliation of the host nation.
His partnership with Bastian Schweinsteiger was hailed as one of the tournament's most potent pairings.
The 24-year-old, who made 130 apperances for Bayern, scoring 13 goals, won three Bundesliga titles and three German cups in four seasons at the Allianz Arena but sparked a flurry of interest from Europe's heavyweight clubs after deciding his future would be away from Germany.
Former United boss David Moyes had prescribed Kroos as the perfect remedy to United's midfield shortage and had scouted the coveted star many times.
The Old Trafford club was reportedly in pole postion to prise Kroos from Bayern but a proposed move never materialised after Moyes' disastrous spell at United was cut short in April.
Chelsea had also been in the running to take Kroos to the Premier League and are likely to now focus on tempting Sami Khedira to Stamford Bridge.