Saudi Arabia's state-run Al Ekhbariya television station reported that Al Ittihad had reached an agreement with Benzema on a two-year contract, with club officials in Madrid to hammer out a "record deal" with the striker.
The 35-year-old Frenchman had looked set to stay at the Spanish club for one more year after a 2022-23 season in which he struggled with injuries and missed out on France's World Cup campaign in Qatar due to another injury.
However, an offer estimated by media to be worth more than 100 million euros ($107.05 million) from Saudi Arabia reportedly made him reconsider his future.
The Frenchman decided to void the one-year extension clause he had in his contract, with Real saying he had "earned the right to decide his future".
"Real Madrid and our captain Karim Benzema have agreed to bring his brilliant and unforgettable time as a player at our club to a close," the club said in a statement.
"Karim Benzema's career at Real Madrid has been a shining example of conduct and professionalism, and he has represented the values of our club."
Benzema could follow his former Real team mate Cristiano Ronaldo to the Gulf country after the Portugal forward signed a 2-1/2 year contract estimated to be worth more than 200 million euros with Al Nassr in December.
REAL'S SPEARHEAD
Having joined Real in 2009 from Olympique Lyonnais, Benzema became the spearhead of the club's attack and their main goal-scoring threat after Ronaldo left for Juventus in 2018.
Benzema scored more than 350 goals for Real to sit second on the club's all-time scoring list behind Ronaldo.
He had his best season in the 2021-22 campaign when he scored 44 times in all competitions to lead the side to a record-extending 14th European title as well as the LaLiga crown.
In the Champions League, Real made remarkable comebacks from losing positions in the last 16, quarter-finals and semi-finals against Paris St Germain, Chelsea and Manchester City respectively -- with Benzema scoring in each of the second legs.
His pivotal role earned him the Ballon d'Or crown, making him the first French player to win the trophy since Zinedine Zidane in 1998 and the fifth Frenchman overall.
He finishes his career in the Spanish capital with a record 25 trophies with the club, including five European Cups, four LaLiga titles and three Copas del Rey.
Benzema's exit comes a day after Real announced Eden Hazard was also leaving the club after agreeing to terminate his contract a year early.
Real also confirmed the exits of attacking midfielder Marco Asensio and striker Mariano Diaz, leaving holes in the attack for club president Florentino Perez to plug in the close season.
