The midfielder, who has been with the Brazilian club since the age of 11, will start at the Spanish giants' B side Real Madris Castilla.
The 20-year-old has made over 60 appearances for his home club in three years in the first team.
Casemiro's agent Joseph Lee explained to Lancenet: "It's loan deal until the end of the season, with an option to buy.
"It's not that he will play for the B team, he will just acclimatise in the B team, and then will play for the A team later on.
"This is something he needs, but the offer comes for him to play for the senior team, he is not a B team player.
"He was not playing at Sao Paulo and he needs to play. The offer came, we talked with Casemiro who expressed his interest."