Higuain, regarded as one of South America's most promising players, has agreed a 6-1/2 year contract, Radio Marca said Thursday.
The 19-year-old, who will be eligible to play for Madrid once the transfer window opens on Jan. 2, last month rejected a call-up from France. The striker was born in France of Argentine parents and moved to Argentina when he was a baby.
Higuain, who scored his final goal of the Argentine league season in last Sunday's 1-1 draw with Velez Sarsfield, is expected to be followed soon by Boca Juniors' 20-year-old midfielder Fernando Gago, reports AP.
Gago, who played in Boca's 2-1 defeat in Argentina's title playoff against Estudiantes on Wednesday, is reportedly set to join Madrid for a fee of around Ђ20 million (US$26.4 million)
Last month, Madrid signed 18-year-old Brazil left-back Marcelo from Fluminense for a reported fee of Ђ6 million (US$7.9 million).
Madrid is third in the Spanish league with 29 points, four fewer than leader and defending champion FC Barcelona.