The Spain international, 32, won the Liga title three times and the Champions League twice in his eight-year career at the Santiago Bernabeu.
The last Spanish title triumph arrived last season on the final day when they beat Mallorca 3-1.
The player had asked Madrid, who were not keen on strengthening one of their major domestic rivals, to facilitate a transfer out of recognition of his contribution to their success.
La Liga
Drenthe keen to make Madrid move
06/08/2007 AT 19:58
Meanwhile Mallorca have signed Che defender David Navarro, who cannot play until September after he punched Internazionale's Nicolas Burdisso on the nose following a Champions League quarter-final last season.
Elsewhere in Spain, Zaragoza are reportedly in negotiations with Atletico Madrid for Pablo Ibanez while Arsenal's Mexican prodigy Carlos Vela has joined Osasuna on a season loan.