Compensation for Toronto will be announced later tonight.
Farrell's contract is reportedly a four-year deal.
Farrell returns to Boston after being their pitching coach from 2007-10 under former manager Terry Francona before accepting Toronto's managerial position in 2011.
Farrell now has the very difficult task of restoring the Red Sox back to their usual success.
This past season under manager Bobby Valentine was a year marred by tension in the clubhouse, poor play and a multitude of questionable decisions by Valentine himself. These issues led to arguably the worst season in the Red Sox's storied history as they finished 69-93 on the year, and Valentine's inevitable firing came immediately after the conclusion of Boston's tumultuous season.
It will probably prove to be extremely difficult for the Red Sox to turn their organization around, but the hiring of Farrell could prove to be a boon for Boston as they try to move on from the 2012 season that was in disarray from the beginning.
UPDATE: The Boston Red Sox have sent shortstop Mike Aviles to the Toronto Blue Jays as compensation for the hiring of former manager John Farrell.