The MLS side announced the move early on Monday. Schweinsteiger will meet with his new side next week after signing a contract which will reportedly see him earn $4.5 million in 2017.
The 32-year-old emerged at Old Trafford in 2015 from Bayern Munich, where he won eight Bundesliga titles and the Champions League and Club World Cup, while he played in three World Cup finals with Germany, winning one.
Though he started off as a first-team regular under Louis van Gaal, injuries prevented him from keeping his place in the starting XI at United. Shortly after Jose Mourinho took over this season, he was banished to train with the reservesm but remained respected by the fans and earned his place in the squad for their Europa League campaign, coming on against Saint-Etienne in their second round win.
However, Schweinsteiger has opted to seek another opportunity and agreed to a move to Illinois. While he admits he was persuaded to join by the club's "vision and philosophy", he revealed it is not an easy step.
"I am sad to leave so many friends at Manchester United," he told United's official website. "But I am grateful to the club for allowing me the chance to take up the challenge at Chicago Fire.
"I have enjoyed working with the manager, the players and staff here and wish them all the best in the future. But I have to reserve special thanks to the United fans – whose support has been a very special part of my time in Manchester.
"I was delighted to be part of the squad that won the FA Cup for them last season and will always remember their energy and their passion. Now is the right time for me to start a new chapter in Chicago and I am looking forward to it."
Schweinsteiger made just four appearances in all competitions this season, making 31 the previous season.