It had been reported in Spain that Casillas transfer had fallen through, but a deal has been now been done for the free transfer.
The goalkeeper spent 25 years at Real, joining as a nine-year-old.
"During that time Iker has managed to become one of our main references and has earned the respect, affection, admiration and affection of fans beyond [Real Madrid]," a statement on the club website said.
Casillas, who has won three Champions Leagues and five Spanish league titles in 725 games for the club, will travel to the Netherlands to meet the squad where they are pre-season training.
It is news Man United supporters will not welcome, with Real Madrid chasing their goalkeeper De Gea.
The current Old Trafford no.1 has a year left on his contract and now the Spanish side have cleared space for him, a transfer appears close.
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