The Spanish club announced on their website that they have reached agreement with City for Adebayor to move to Madrid on loan, with "a unilateral option" for them to purchase the 26-year-old in the summer.
Their statement read: "Real Madrid CF and Manchester City FC have reached a deal that will see Emmanuel Adebayor play on loan for the former club. The player will remain at Real Madrid until the end of the current season, at which point the club hold a unilateral option to purchase the player."
Initially a massive hit following his ¦pound;25million move north from Arsenal 18 months ago, scoring in his first four games for City, Adebayor's star faded after Roberto Mancini replaced Mark Hughes as manager.
By the end of last season it had already become apparent that the striker could no longer command a regular place for the Blues.
Things got no better this term and, although he scored a Europa League hat-trick against Lech Poznan in October, the arrival of Mario Balotelli had shunted Adebayor further down the pecking order and he openly spoke of his desire to move elsewhere.
Monaco expressed a firm interest but were unable to come up with the necessary finance, leaving the way clear for Real, once Jose Mourinho overcame some reservations amongst the Bernabeu hierarchy over his desire to bring Adebayor - who would be available for the Champions League - in as cover for Gonzalo Higuain, who is expected to miss the remainder of the season with a back injury.
The move is the second high-profile striking departure in the past six months following Robinho's move to AC Milan.
Undoubtedly, the high point of Adebayor's time at City - during which time he scored 19 goals in 43 games - was his first appearance against Arsenal last September when he raced the length of the field to celebrate in front of the Gunners supporters after scoring City's third goal.
However, that day saw the best and worst of Adebayor's character as he incurred a three-match ban for raking his studs down the side of Robin van Persie's face.