Rabiot is expected to earn €10 million per year in the Catalan capital.
PSG said in December they would allow Rabiot to leave the club at the end of the 2018-19 campaign. After several negotiations, the two parties failed to agree to a new contract, and with the situation deteriorating, PSG told Rabiot he won't play for the remainder of the season.
"The club made the decision after a meeting with the player," sporting director Antero Henrique told Yahoo! Sports. "The player told me he would not sign a new contract and wanted to leave the club as a free agent at the end of the season."
"The clear consequence of this is that he will be out of the starting line up for an unlimited period," he added.
Rabiot has spent his entire professional career with the French side, showing incredible skill as both a deep-lying playmaker and box-to-box midfielder.
However, his attitude has caused friction at the club and international level. When France manager Didier Deschamps left Rabiot off his World Cup squad, the 23-year-old announced he wouldn't make himself available on standby.
As a pending free agent in the final months of his contract, Rabiot has the right to speak to potential suitors and sign a pre-agreement with any club.