Fluminense claimed on their official website on Saturday that the 32-year-old will sign a two-year contract at the Rio de Janeiro-based outfit and be officially unveiled on Monday.
A club statement read: "The vice president of Fluminense, Alcides Antunes, has officially signed Deco from Chelsea. After intense negotiations, the player, who participated in two World Cups for the Portugal national team, got his release from the English club and will sign a two-year contract with the Tricolor. Deco will be officially presented to the press at 12:30 (local time) on Monday."
Later on Saturday, Chelsea confirmed the move, saying Deco was "allowed to leave the club for Brazil last week on compassionate grounds, ahead of the clubs agreeing a deal.
"We wish Deco and his family well in the future, and thank him for his service to Chelsea."
Deco, who was born in Brazil, joined Chelsea from Barcelona in 2008, signed by Luiz Felipe Scolari, but failed to shine at Stamford Bridge.
He won the Champions League twice, with Barca in 2006 and Porto, under Jose Mourinho, in 2004.
He will link up at Fluminense with old Chelsea team-mate Juliano Belletti.