After his deal expired at the end of the season Los Blancos had agreed a short-term contract extension for the Spaniard to keep him for the Club World Cup, which they competed in this summer in the United States.

"Vazquez exemplarily represents the values of Real Madrid, which has made him one of the most beloved players by our fans," said Madrid president Florentino Perez in a statement.

"(He) symbolises the hard work, perseverance, humility, and winning spirit essential to succeed in this shirt."

Originally a winger, the 34-year-old won 23 trophies at the club including five Champions Leagues and four La Liga titles, largely as a squad player.

"I leave Real Madrid but Real Madrid will never leave me," said Vazquez in a goodbye video.

The Spaniard came through the Madrid youth system and spent his whole career at the club, with the exception of a loan to Espanyol in the 2014-15 season, playing 402 times across all competitions for Los Blancos.