A Red Bulls press release stated that MLS has agreed in principle to a transfer fee and that Altidore must agree to personal contract terms and undergo a physical with Villarreal before the deal can be completed.
Altidore, who scored against Mexico in his first start for the USA in February, debuted for New York in 2006, when he scored four goals in nine games.
He scored nine goals and assisted four times in 22 appearances in 2007, and this season leads the Red Bulls in scoring with three goals in eight games.
MLS deputy commissioner Ivan Gazidis told the Associated Press:
"This was a decision we and the Red Bulls took rationally, with the objective to achieve a couple of things: provide Jozy with an opportunity he's been looking for, and more importantly from our point of view, give us resources to elevate the team and the league.
"It's an offer we wouldn't be accepting unless we believed the money gave us the opportunity to make the Red Bulls and MLS better. Our only motivation is that we received such value that it can let us make a step forward."