The Spain international - a Blancos youth product - left the Santiago Bernabeu side in 2008, but the departure of Iker Casillas to Porto triggered a pursuit from his former club to bring him back this summer as a replacement.
Following Espanyol's announcement that a deal had been reached with Madrid, the Blancos revealed the length of Casilla's contract based on the assumption no fitness problems are found in his upcoming medical.
"Real Madrid and Espanyol have agreed to the transfer of Kiko Casilla, subject to a necessary medical examination," Madrid stated. "The player will be tied to the club for the next five seasons.
At a press conference on Friday, Casilla paid tribute to Casillas' 25 years on Madrid's books but believes he can now seize the opportunity to become Rafa Benitez's No.1.
"The opportunity to sign for Real Madrid comes only once and I was determined to take it," he told reporters. "Iker's time at Madrid is at an end and I wish him the best, but now it's my turn. I think he's the best Madrid goalkeeper ever, though.
"Espanyol gave me the opportunity to become a professional player and I am grateful to the club for letting me leave. They'll remain a close club to me and I hope to come back someday in the future."
The undisclosed offer from Madrid could spell the end of their efforts to sign Manchester United shot-stopper David de Gea, with Costa Rica star Keylor Navas providing competition to Casilla in 2015-16.
Casilla's contract would have allowed him to join Rafa Benitez's squad for €10 million,
but it is widely believed that the Barcelona-based club have parted ways with the 28-year-old for a fee nearer €6m after rejecting a €4m offer earlier in July.
Casilla had featured 126 times for Espanyol in his seven years at the Estadi Cornella El Prat.
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