The 31-year-old has been the subject of interest from the Canadian club for some time and on Friday morning Spurs confirmed the England international was leaving.
The deal will be effective from February 28 meaning Defoe has the opportunity to add to his 142 goals for the White Hart Lane club.
Tottenham, who it is understood were paid in excess of £8million, added on their official website that as part of the move they had agreed an advertising and marketing deal with Maple Leaf Sports and Entertainment - Toronto's owners - and a friendly with the club on July 23.
"This is a great opportunity for Jermain and he feels it is one that he wishes to pursue," said Spurs head coach Tim Sherwood.
"He has played a big part in the club for many years and we all know he will give his best until his last minute in a Spurs shirt.
"We have several attacking options within our squad for the remaining dozen or so games of the season after Jermain departs and we shall keep our options under review.
"We also have a goal threat from players in other areas of the pitch including having wide players and attacking midfielders who will enable us to vary our shape when required."
Tottenham have at least nine fixtures to play before Defoe's scheduled departure and he is hoping to play a full part in them.
"Everybody knows how much this club means to me and I will play my heart out for the team and the fans until my last kick for the club," he said.
"I have had a fantastic time here and the fans have always been amazing to me.
"I am grateful for the opportunity for myself and my family to experience living overseas and for me to play in the MLS with a contract that will take me to the age of 35. I have no doubt I shall be coming back as a fan supporting the team in the years to come too."
Defoe's current spell with Tottenham is his second one, having left in 2008 for a year with Portsmouth.
Prior to his first stint with the club he was at West Ham, with whom he made his professional debut aged 16.
He has won 55 caps for England scoring 19 goals and will be hopeful of winning a place in Roy Hodgson's squad for this summer's World Cup.
It remains to be seen how this move will affect him, though.
Former Tottenham captain Robbie Keane has remained a regular with the Republic of Ireland since moving to Los Angeles Galaxy, but David Beckham found selection harder to earn after he swapped England for the United States.