Former France striker Benzema, 35, won 25 trophies during his time in Madrid and scored 354 goals in 648 appearances to become Real’s second all-time top scorer after Cristiano Ronaldo.
He netted for the final time for Real in their last game of the season on Sunday night, a penalty equaliser in a 1-1 draw with Athletic Bilbao.
“Real Madrid and our captain Karim Benzema have agreed to end his brilliant and unforgettable period as a player for our club,” read a club statement from the Spanish giants.
“Real Madrid would like to show its gratitude and affection to a player who is already one of our greatest legends.
“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.
“Karim Benzema has earned the right to decide his future.
— Real Madrid C.F. 🇬🇧🇺🇸 (@realmadriden) June 4, 2023
“Madridistas and all the fans around the world have enjoyed his magical and unique football, which has made him one of the great icons of our club and one of the great legends of world football.
“Real Madrid is and will always be his home, and we wish him and all his family the best in this new stage of his life.”
Benzema, the current Ballon d’Or and UEFA Player of the Year, joined Real from Lyon in July 2009 for a reported transfer fee of 35 million euros.
He is fifth on the list of players with the most Real appearances and his trophy haul in Spain includes five Champions Leagues, five Club World Cups, four European Super Cups, four LaLiga titles, three Copas del Rey and four Spanish Super Cups.
Benzema has been linked with a move to Saudi Arabian side Al-Ittihad.
Real have confirmed they will hold “an institutional act of tribute and farewell” to Benzema in the Spanish capital on Tuesday in the presence of club president Florentino Perez.