The 31-year old will remain in Washington until the international transfer window opens in July but will then head back to Australia to take up a two-year deal with the second-year club.
Former Philadelphia Union midfielder Fred, who is already well known in the A-League after his brilliant performances for the Melbourne Victory in the 2006/07 season, was given permission by DC to negotiate with other clubs and he will leave the RFK Stadium with their blessing says general manager Dave Kasper.
"When we re-acquired Fred earlier this year, we agreed in principle that we would let him go if he had an opportunity to sign abroad for a better contract," said Kasper.
"Fred has been nothing but a professional throughout his time at DC United and we have granted his request. The move will also free up significant salary as we look to improve our team during the upcoming transfer window.
"We thank Fred for his contributions to DC United and we wish him the best of luck."