England fly-half George Ford will rejoin Leicester from Bath next season - with Freddie Burns heading in the opposite direction.
Bath managing director Tarquin McDonald, meanwhile, confirmed that the west country club have also received "appropriate compensation" following Ford's Welford Road return for next term.
Ford moved to Bath in 2013, when his father Mike was head coach, and helped the club reach the 2014 European Challenge Cup final and Aviva Premiership showpiece a year later.
Bath's decision to part company with Mike Ford - who still had three years remaining on his contract - in May 2016 after a poor season left its mark on George.
The England star had also been linked with a move to Sale Sharks in recent months, but Leicester's confirmation of his capture is no surprise.
Ford, 23, has won 32 Test caps and been a mainstay of Eddie Jones' all-conquering England team, helping them win the RBS 6 Nations title and grand slam last year, in addition to posting a 3-0 series triumph against Australia.
Ford, whose move back to the Tigers had been widely trailed, made his Leicester first-team debut as a 16-year-old, making more than 40 appearances before moving to Bath.
Burns, meanwhile, arrived at Leicester from Gloucester in 2014 and started two Tests during England's 2014 New Zealand tour.
Ford told Bath's official club website that he feels his decision is the right one at this stage of his career.
"This hasn't been an easy decision for me to make, but I feel it is the best one for me at this time," he said.
"I have really enjoyed my time at Bath and have worked with some incredible players and coaches. I know I have developed hugely as a player because of that."
Bath managing director McDonald added: "We are, of course, sorry to lose George and wish him well, but we have been in discussions about his future for some time and are glad we have now been able to conclude this matter positively.
"The agreement with Leicester suits all sides, with Bath securing not just appropriate compensation, but most importantly an excellent new player."
And Bath rugby director Todd Blackadder said: "We are naturally disappointed that George has decided to leave.
"He is a great player and I have enjoyed working with him, and know that he will give us his all until the end of the season. We have a great season ahead of us this year, and in 2017/18 and beyond."
Leicester head coach Aaron Mauger told the Tigers website they had signed "one of the leading players in his position in Europe".
Mauger said: "We are absolutely delighted to be able to confirm the signing of George Ford, a player we obviously know well from his time here in the academy and as a young man making the breakthrough into senior rugby.
"He has become one of the leading players in his position in Europe, and is still a young man with a lot of rugby ahead of him. We look forward to his return to Welford Road in the summer.
"While delighted to be able to bring in George, we are disappointed to lose Freddie, who has been an outstanding player for us in the last three years.
"Freddie has bought totally into the Tigers ethos in his time here, and he is a popular member of the squad with the players and supporters.
"Freddie has made a significant contribution on and off the field here, and we look forward to him continuing to play a prominent role with us in the remainder of the season, while wishing him well when he moves to Bath in the summer."