McCarthy's current Connacht contract expires next summer.
"We are bitterly disappointed to lose Mike McCarthy, who has been a popular senior member of our squad," Connacht chief executive Tom Sears said.
"While disappointed, particularly given the continued success of Connacht in recent years, we respect the individual player's decision and wish Mike every success in his future playing career."
The 31-year-old was man of the match in the province's historic 22-14 win over Biarritz last Friday, and the lure of a move to the Heineken Cup champions was too strong for McCarthy, who was a key figure in Declan Kidney's Ireland side during the November internationals.
Connacht had asked for IRFU help to keep the English-born lock who started Ireland's Tests against South Africa and Argentina last month, featuring in the second- row.
The blow of his transfer could be softened if Sean Cronin opts to move the other way when his contract expires at the end of the season. The Limerick man made the move from Connacht to Leinster two seasons ago but has had to share the No 2 jersey with Ireland rival Richardt Strauss.
The Westerners have a real shot at the Heineken Cup quarter-finals if they can secure back-to-back wins over Biarritz, who would appear to be in freefall.
France legend Serge Blanco lost patience with coaches Jack Isaac and Serge Milhas yesterday and placed them on gardening leave until January 6. Athletic director Laurent Rodriguez and director of the training centre Mathieu Rourre will now take charge.
Connacht, meanwhile, continue their own search for a new head coach to replace the departing Eric Elwood.
Interviews are ongoing at the Sportsground, with current assistant coaches Billy Millard and Dan McFarland joining Samoa coach Pat Lam, former Ospreys boss Sean Holley, Clermont backs coach Alex King and ex-Wasps and Sale man Tony Hanks in the running for the position believed to be worth between €200,000 and €250,000 a year.
Buoyed by the expected arrival of McCarthy next season, Leinster are also a step closer to retaining the services of Mike Ross.
Ross' contract with the IRFU is up at the end of this season and negotiations on a new contract have not run smoothly. However, the Irish prop yesterday confirmed that talks are "ongoing" and are of a positive nature.
"We're having a chat," said Ross. "I'm happy where I am and I don't see myself (moving). Obviously it's not something I like to talk about but we're chatting with the Union and I think we're moving down the right track."