The move, which will go through on March 18 subject to international clearance, will see Pozuelo, 27, end an almost four-year association with Genk to move to MLS.
Terms of the deal were not disclosed, but a league source told ESPN FC that the transfer fee was between $9-10 million including incentives.
The club captain has helped steer his side to the top of Belgium's Jupiler Pro League this season.
"Alejandro is an excellent player who has the ability to both create and score goals," Toronto FC General Manager Ali Curtis told the club's official website.
"He is the best player on the best team in Belgium's top division. Obviously, and for so many reasons, we would like him to join us now, but we look forward to his arrival on March 18.
"We are very excited for the 2019 season, and adding another important piece to a group that already has a lot of quality only makes us stronger."
Pozuelo began his career at Real Betis and had a spell at Swansea and Rayo Vallecano before moving to Genk.
In January, Giovinco hit out at Toronto FC after being sold to Saudi Arabia club Al-Hilal.
Giovinco, 32, was in the last year of his contract with Toronto and wrote on Instagram that "he was hoping to renew my contract and finish my playing career in a city that feels like home."
Toronto FC, who beat Philadelphia Union 3-1 in their first match of the season, face the New England Revolution on March 17 (streaming live on ESPN+ at 7:30 p.m. ET).
Pozuelo's first MLS game with the team could come March 29 at home against New York City FC.
ESPN FC writer Jeff Carlisle contributed to this report.