Real Madrid said on its Web site Thursday that the transfer will go through next week after Albiol has passed a physical and signs a five-year contract.
Real said the 23-year-old defender will be introduced next week.
No details of the fee were given, but Spanish media reported on Wednesday that Madrid has agreed to pay Valencia $21 million for Albiol, who has been playing at the Confederations Cup in South Africa.
Albiol, who also played at Getafe, will be new Real Madrid president Florentino Perez's first Spanish signing after bringing Cristiano Ronaldo and Kaka to the Santiago Bernabeu.
Albiol was a member of the European Championship-winning team last summer and has made 15 international appearances.
The center back played 126 league games in four full seasons at the Mestalla.