Rodriguez struggled to hold down a regular shirt in his three years at Real Madrid but managed to help them win two Champions League trophies and a La Liga title.
The Colombian playmaker has now joined Bayern Munich on a two-year loan deal to reunite with Carlo Ancelotti whom he worked with at Real Madrid.
The move will be completed once the 25-year-old completes his medicals with Bayern Munich.
“We're delighted we've been able to complete this transfer,” Bayern Munich Karl-Heinz Rummenigge told the club’s official website on the signing of Rodriguez.
“Signing James Rodríguez was our coach Carlo Ancelotti's biggest wish, following their successful spell working together in Madrid.
“James is a very versatile player. He's a goalscorer himself, he sets up a lot of goals and on top of that he's great from set-pieces. There's no question that this transfer further increases the quality in our team.”
Bayern Munich has the option to permanently sign Rodriguez at the end of the loan deal- which could cost up to £40m.
The former Monaco player will join Bayern Munich squad for a pre-season 12-day Audi Summer Tour to China and Singapore.