Nelsen, who has made 21 appearances for Rangers this season, was given time off by manager Harry Redknapp to travel to Canada for talks with Toronto, and the deal has now been finalised.
The New Zealand international is under contract with QPR until June 30th 2013, and will be available for their Loftus Road tie with Tottenham on Saturday, but has requested to enter talks with Redknapp to discuss when he can join up with his new club.
Speaking at a press conference in Canada, Nelsen said: "I am under contract at QPR.
"Harry Redknapp and Tony Fernandes, the owner of QPR, are fantastic people. They are such nice people.
"I've got some obligations at QPR that we have just got to go through.
"It has been a bit of whirlwind so there are some details we have to go through."
Redknapp, who signed the defender when Tottenham manager, said earlier: "Nelsen is very important to us, a fantastic leader, a top player.
"He wants to be a manager and it is a chance for him to manage a club.
"He has been fantastic. I took him to Tottenham last year from Blackburn. He's one of the best pros I've ever met in my life, a fantastic player, a great trainer.
"He is a massive part of your team. To lose him would be a massive blow for us."
Nelsen is clear that there will be no playing role for him back in MLS, having made his name there during a four-year spell with DC United - another club he was recently linked to.
The move to Canada will see him link up once against with the club's president and general manager Kevin Payne, who was an executive at DC United when Nelsen played there.
"From the day Ryan arrived in D.C. as a 23 year old player, I always knew he would be a head coach someday," Payne said.
"I believe his leadership qualities, intelligence, preparation and character will contribute to his success as a coach. I couldn't ask for a better person to lead our club."