Talks are ongoing over the exact numbers involved but sources have told ESPN that Ozil will not receive all of the approximately £7 million in wages he is owed.
Instead, he will join Fenerbahce as a free agent after the Turkish club beat off competition from MLS side D.C. United to his signature.
Ozil is expected to go to the training ground tomorrow to say his goodbyes, sources have told ESPN, as the team prepares for Monday's Premier League home game against Newcastle.
The 32-year-old had been frozen out of the first-team picture at Emirates Stadium to the extent he was not even registered for Premier League or Europa League action this season.
January offers a chance for teams to change their squad for both competitions but Arsenal had indicated to Ozil he still had no prospect of playing. As a result, the midfielder's camp began talks with interested overseas clubs as he entered the final six months of his £350,000-a-week contract.
That club-record wage has been a significant financial burden with Ozil insisting he is owed the remaining £7m if he is not able to see out the remainder of his existing deal.
Negotiations have been continuing throughout January with Fenerbahce and MLS side D.C. United but the issue of his outstanding Arsenal contract remained a significant stumbling block.
However, sources have told ESPN that an agreement has been reached in principle which frees up Ozil to end his seven-and-a-half-year spell in north London and begin a new chapter in a country where he has family heritage. His grandparents migrated from Turkey to Germany.
He made 184 Premier League appearances for Arsenal and won three FA Cups.
Ozil's first three years at the club saw his best form, equalling Thierry Henry's record of 19 Premier League assists in 2015-16 but he gradually fell out of favour once Arsene Wenger left the club, falling out with his successor Unai Emery and later Mikel Arteta.
Ozil started the first 10 League games under Arteta before lockdown due to COVID-19, during which the vast majority of Arsenal's first-team squad accepted a 12.5% pay cut.
Ozil refused because the club had not made it clear how the money would be spent and he has not played since.
There was also friction between Ozil and the club over his public criticism of the treatment of the Uighur Muslims in China.
Arsenal issued a statement at the time which read: "The content published is Ozil's personal opinion. As a football club, Arsenal has always adhered to the principle of not involving itself in politics."
However, the saga is now finally over with Ozil set to depart.