The 35-year-old midfielder is a stalwart of the Catalan side over recent years and one of the heroes of Spain's Euro and World Cup-winning squads.
His father Joaquin Hernandez told the Cope radio station Xavi had decided "the moment has come to say goodbye".
He said the contract with Al Sadd would allow Xavi to train as a coach as well as playing.
"He is lucky to have received a really impressive offer where he can continue playing football, train as a future coach and also rest a little."
He will give a farewell press conference on Thursday, Barcelona sports daily El Mundo Deportivo reported, citing unnamed club sources.
His contract with the Spanish league champions runs until next year but he has reportedly decided to leave after the end of the current season.
Barca sealed their league victory on Sunday with a 1-0 win away over Atletico Madrid.
Xavi was filmed weeping with joy after that win. It is his eighth title in the league and his 23rd overall with Barcelona, making him the player with most medals in the club's history.
He still has the chance to end his last season at Barcelona with a treble, as he side will play in the finals of the Spanish cup and Champions League.
Xavi joined Barcelona in 1991 at the age of 11. He has played more than 760 matches for the side -- more than any other player.