The 22-year-old has agreed to a four-year deal with the German record titleholders and will join up with his new team-mates and former Barcelona head coach Pep Guardiola later this week.
'Thiago or nothing'
Guardiola had named Thiago as his only transfer target of the summer during a press conference at Bayern's training camp in Trentino and is now set to be reunited with the player he coached for four seasons in Barcelona.
"Thiago Alcantara was a player greatly coveted by our new head coach Pep Guardiola," explained FC Bayern chief executive Karl-Heinz Rummenigge. "We're delighted to be able to finalise this huge transfer. Thiago has just recently been selected as the best player at the U-21 European Championships. He's a fantastic player with a lot of potential, who will undoubtedly make FC Bayern even stronger."
Thiago, whose father is former Brazil international and 1994 FIFA World Cup winner Mazinho, had been at the Camp Nou since 2005. Despite being born in Italy to a Brazilian father, he opted to represent Spain at international level.
After appearing for his national side's youth teams from U-17 level to U-23s, he was given his full international debut in November 2011 and has since won three full caps. Most recently, he captained the Spain team to victory in the UEFA U-21 European Championships in Israel, scoring a hat-trick in the 4-2 win over Italy in the final.