Farnsworth's agent informed the Braves that the right-hander would not return to Atlanta as its closer, instead signing with the Yankees to serve as Mariano Rivera's setup man.
"We wanted him as our closer," Braves general manager John Schuerholz told the Atlanta Journal-Constitution. "We offered a three-year deal and were prepared to stay engaged in the negotiations, but we were told that he had decided to go to New York as a setup guy."
Farnsworth will ink a three-year deal worth about $17 million and take over the role that Tom Gordon has filled for the past two years. Gordon, who is also a free agent, is currently being pursued by several teams, including the Phillies and Indians.
If the Yankees sign Farnsworth before Dec. 7 -- or if they wait until after that date and Atlanta offers him arbitration -- they will owe the Braves a first-round draft pick as compensation.
Farnsworth, who turns 30 in April, went 1-1 with 16 saves for the Tigers and Braves last season, posting a 2.19 ERA. He struck out 87 batters in 70 innings, holding opponents to a .180 average in 72 appearances.
Mark Feinsand is a reporter for MLB.com. This story was not subject to the approval of Major League Baseball or its clubs.