The Madrid club will pay Eibar's release clause of €400,000 to complete the move.
Rayo had spent a long period negotiating with Jagoba Arrasate, reaching a verbal agreement, but president Raúl Martín Presa never formalised the contract. Both sides had been in full agreement and relations between Arrasate and the club had been excellent, but Rayo ultimately decided against finalising the deal, having been drawn to the attacking style and philosophy San José offered instead.
The appointment marks San José's first experience in LaLiga.
A product of Real Sociedad's academy, the Basque coach has spent almost his entire managerial career outside Spain, with spells at Al-Ittihad, Al-Ettifaq, Antofagasta, Bolivar, Universidad Catolica, Al-Nasr, KAS Eupen, Mazatlan and a second stint at Bolivar before joining Eibar in February 2025.
His arrival represents a significant shift in approach for Rayo, who have built a reputation in recent seasons around a disciplined, counter-attacking style under previous coaches. San José is known for a more possession-based, attacking approach across his varied managerial postings on three continents.
The decision to overlook Arrasate in favour of an unproven coach in Spanish football reflects Rayo's determination to evolve their identity rather than simply continue with a tried and tested approach, even at the cost of a deal that had appeared close to completion with a more experienced LaLiga candidate.
San José will now have a matter of weeks to implement his ideas before the new LaLiga season begins, with Rayo aiming to build on a campaign that again saw them compete for a European place.
The club's willingness to walk away from a near-complete agreement with a known LaLiga quantity in Arrasate, in favour of a coach with no top-flight experience in Spain, underlines how highly Rayo's hierarchy rate the attacking principles San José is expected to bring to the squad.