The 30-year-old will make the switch from AC Milan, where he is on loan from Chelsea, back to his boyhood club seven years after he departed.
The transfer will take place after a medical check has been performed on the forward, Atlético Madrid said in a statement on its website.
The move will be finalized on January 5th during the winter transfer period.
Sports newspapers such as Marca and AS over the weekend said Torres's move back to Atletico was decided after the Madrid club's Italian player Alessio Cerci agreed to move to Milan in return.
During six seasons at Atlético Madrid, Torres, who became club captain, played 244 games and scored 91 goals.
After his rise in Madrid, he was then snapped up by Premier League club Liverpool where he spent four successful seasons before a high profile £50 million (€63.8 million /$77.9 million) transfer to Chelsea where he struggled badly to reach his previous heights.
Torres scored some memorable goals for the Stamford Bridge outfit, notably in the 2012 Champions League semi-final win over Barcelona and the 2013 Europa League final when the Blues edged Benfica 2-1 in the final minute.
He also won the FA Cup as well as the Champions League but came in for constant scrutiny over his scoring rate of 45 total goals, 20 in the Premier League, in 172 matches.
The Spanish international, who also won the 2010 World Cup and 2008 and 2012 European championships, also found his place in the national team called into question.
He has scored just one goal for AC Milan this season.