The Austrian centre-back, 33, joins Dani Carvajal in receiving a formal farewell at the Santiago Bernabéu on Saturday during the final LaLiga fixture of the season against Athletic Club.
The club's official statement read: "Real Madrid CF and David Alaba have agreed to bring an end to his time as a player of our club at the conclusion of the current season. Real Madrid wishes to express its gratitude and all its affection to a player who formed part of a team that starred in one of the most successful periods in our history.
"David Alaba defended our shirt in 131 matches over five seasons, winning 11 titles: two European Cups, two Club World Cups, two UEFA Super Cups, two LaLiga titles, one Copa del Rey and two Spanish Super Cups."
Club president Florentino Pérez added: "David Alaba leaves with the affection of all Madridistas for his dedication, his work and an iconic image on our road to the Decimocuarta that symbolised the celebration of a victory and that is now part of the history of our club. Real Madrid will always be his home."
That image — Alaba lifting a chair on the touchline during the euphoric comeback against Paris Saint-Germain in the 2021-22 Champions League — has become one of the defining emotional moments of that extraordinary run to the European title. It captured something about who he was in that squad: a player of calm and leadership who, in the right moment, could not contain himself.
Alaba arrived from Bayern Munich in the summer of 2021 on a free transfer and was immediately central to Carlo Ancelotti's team. He played a key role in the 2022 Champions League campaign, contributing to victories over Paris Saint-Germain, Chelsea and Manchester City before the final against Liverpool in Paris.
The rupture of his anterior cruciate ligament in December 2023 changed everything. He never fully recovered his previous level, and his involvement this season under Álvaro Arbeloa was minimal. Staff at Valdebebas described him throughout his time at the club as the "Switzerland" of the dressing room — neutral, calm, always looking to hold the group together — though his final months, with limited playing time creating visible frustration, were not his happiest.
At 33, Alaba will captain Austria at the World Cup before assessing his next move. AC Milan are reported to be interested, along with clubs from MLS and the Saudi Pro League.
He deserved more time on the Bernabéu pitch in the final chapter. The injuries did not allow it.