Real Madrid made the announcement ahead of Real Madrid's final La Liga game of the season on Sunday, in which Benzema scored the equaliser in a 1-1 draw with Athletic Bilbao.
According to reports, the former France striker and current holder of the Ballon D'or, is set to join Al-Ittihad in Saudi Arabia.
Benzema, who joined Real Madrid from Olympique Lyon in the summer of 2009, had one year remaining on his contract, but has reached an agreement with his employers to leave early.
In a long tribute posted on the club's website, Real Madrid wrote: "Real Madrid and our captain Karim Benzema have agreed to bring to an end to his brilliant and unforgettable time as a player at our club."
"Real Madrid would like to show its gratitude and affection to the man who is already one of our greatest legends.
"Karim Benzema joined our club in 2009, at just 21 years of age, and has been a fundamental player in this golden era of our history.
"During the 14 seasons in which he has defended our badge and our shirt, he has won 25 titles, a record number for Real Madrid: five European Cups, five Club World Cups, four UEFA Super Cups, four LaLiga titles, three Copa del Rey titles and four Spanish Super Cups.
"Karim Benzema is the current Ballon d'Or and UEFA Player of the Year, as well as being included in the FIFA FIFPRO XI and winning the Pichichi Trophy 2022.
"These awards were received after one of the most extraordinary seasons in our history, especially in the Champions League, in which our captain produced memorable performances that contributed to Real Madrid winning the 14th European Cup in Paris, while he was the top scorer of this competition with 15 goals.
"Karim Benzema is the player who has worn our shirt the fifth-most times with 647 appearances, and is Real Madrid's second all-time top scorer with 353 goals.
"He is also Real Madrid's second all-time top scorer in both LaLiga and the European Cup. He is also the fourth top scorer in the history of the Champions League and the fourth top scorer in the history of LaLiga.
"Karim Benzema's career at Real Madrid has been an example of behaviour and professionalism, and has represented the values of our club.
"Karim Benzema has earned the right to decide his future.
"Madridistas and fans all around the world have enjoyed his magical and unique football, which has made him one of the great legends of our club and one of the great legends of world football.
"Real Madrid is and always will be his home, and we wish him and all his family all the best in this new stage of his life.
"Next Tuesday, June 6, at 12:00 noon, an institutional act of homage and farewell to Karim Benzema will take place at Ciudad Real Madrid, with the presence of our president Florentino Perez."
