The 27-year-old has struggled for playing time under Carlo Ancelotti since recovering full fitness and asked to be allowed to leave to find consistent first-team football.
"Badstuber is moving to FC Schalke 04 on loan for the remainder of the season after an agreement was reached between Badstuber, his adviser, Bayern and Schalke," a statement from the Bundesliga champions confirmed.
Chairman Karl-Heinz Rummenigge said: "Holger deserves to play. He's been injured so often but now he's physically fit again and would like to play more games.
"That's why he asked us to allow him to go out on loan to Schalke and we gladly agreed. We hope Holger will get plenty of minutes under his belt in the coming months and we wish him all the best."
Badstuber, who will complete a medical at Veltins Arena in the coming days, said: "I'm thankful that Bayern have complied with my request.
"I'd like to get some much-needed match practice at Schalke and I'm looking forward to my time in Gelsenkirchen."
The centre-back progressed through the Bayern youth system after joining from Stuttgart in 2002.
A series of injuries, including cruciate knee ligament damage and persistent thigh muscle problems, has restricted his involvement throughout the past three seasons.
Manchester City had been linked with a move for the player, with former Bayern coach Pep Guardiola keen on bolstering his defensive options and having identified his former charge as more suited to his desired style of play.
The Catalan will now have to look elsewhere in the winter window.