Danish midfield player Thomas Gravesen is reported to be delighted with the deal, which takes effect immediately and grants him an annual salary of DKK 20 million.
Gravesen´s agent, John Sivebæk, said he would go to Madrid on Friday morning for a medical checkup before the deal was closed.
"He is of course overjoyed and already looking forward to it," Sivebæk said. "It´s amazing to have a Dane playing with Real Madrid."
Gravesen, who has gained himself the nickname "Mad Dog" in English media during his time with Everton, is known for his explosive temperament, fluent ball technique in midfield and an ability to whip is teammates into line.
He will now play alongside Figo, Zidane, Beckham and Carlos, to name but a few.
Gravesen is the third Dane to play with Real Madrid, after Henning Jensen and Michael Laudrup.