The England striker is expected to be unveiled on Monday and sign a four-year deal following a disappointing season at Tottenham
The 31-year-old, who has started only three Premier League games all season, is expected to put his disappointing Spurs campaign behind him and sign a four-year deal with the Canadian club.
The move is likely to earn him at least €109,000-a-week, while the entire four-year deal, which includes the fee and total salary, is estimated to be around €37m.
The England international was linked with a move to West Ham but he has chosen to relocate to North America.
Toronto have also recaptured former attacker Dwayne De Rosario, while Roma midfielder Michael Bradley, who has struggled for first-team football is in advanced negotiations with the club and could be unveiled alongside Defoe.
If the American is signed he will also be on a designated player contract, pushing Toronto's number of total to four.
MLS roster rules allow for a maximum of three DPs per team and, with Defoe and recently signed Brazilian Gilberto also taking up designated player spots, that leaves Argentine midfielder Matias Laba vulnerable.
The flurry of high-priced moves could prove to be a big juggling act for Toronto general manager Tim Bezbatchenko, but he will be helped by the reduction of De Rosario's wage. The Canadian, who counted as a DP for DC United last season, has agreed to a much smaller wage to return to his hometown club.