The 36-year-old has been told he will not be getting a new contract at the Reebok Stadium and is free to leave.
Davies is free to talk to interested parties and Toronto have made their move.
Houston Dynamo showed an interest in January, but at that point the one-time England striker thought he may still prolong his Bolton career.
Now staying at Bolton is not an option, Davies is open to the idea of a move across the Atlantic and Sky Sports report that Toronto boss Ryan Nelsen has spoken to Davies about the prospective move.
The main issue at this moment appears to be whether Bolton would be willing to let Davies leave now or at the end of the season, as Toronto would want him as soon as possible.
However, Bolton's likely involvment in the play-offs means that he could be required to stay up to the Championship play-off final on May 27.
Davies has played over 400 games for Bolton since joining in 2003.