It is understood Mitchell will join the French Top 14 club on a two year deal after agreeing to an offer overnight.
The Waratahs and the ARU had also tabled an offer but are expected to confirm Mitchell's departure on Wednesday.
Waratahs coach Michael Cheika considers Mitchell, a veteran of 63 Tests, at his best to be one of the best wingers in international rugby but had limited capacity under the ARU's salary cap to compete with the money on offer overseas.
Fairfax understands Mitchell had been planning to leave for some time but a turbulent early season at the Waratahs, which saw him dumped from the match 22 before being restored to the run-on side and producing some of his best recent form, delayed the move temporarily.
Mitchell said on Monday he would miss Australia.
"First and foremost, playing for Australia means absolutely everything to me. And playing here at the Waratahs ... I have been to a few different clubs ... Of the three I have played [at], I certainly feel most at home here," he said. "It's a challenge thing, what I want out of footy and life."
Mitchell will join good friend and former Wallabies team mate Giteau at Toulon, as well as former England flyhalf Jonny Wilkinson.
His good friend Adam Ashley-Cooper was also poised to go offshore at the end of this season but pulled out of a deal with a Japanese club after failing to secure an early release from the ARU, it is understood.
Ashley-Cooper re-signed with the Waratahs and Australian
rugby for two years earlier this month. Mitchell made his Wallabies
debut in 2005 and went on to play 63 Tests for Australia.
He started in
Super Rugby with the Reds, playing 37 games there before moving to the Force in 2007. After 38 games over three seasons in Perth
Mitchell moved to the Waratahs in 2010.
He started this season with more
than 30 Super Rugby caps under his belt for NSW and 106 caps in total.