The 29-year-old Scotland international, who joined in 2013, is currently out injured and will move on at the end of his ninth and final season in the Scottish capital.
Toolis is keen for a fresh challenge and also wants to be closer to his native Australia.
He told the Edinburgh website: "I'm moving on at the end of the season because I partly want to experience something new, but also move closer to home.
"When a new opportunity arose in Japan, I was so excited at the prospect of that experience, but the idea of leaving Edinburgh after nine years was also daunting.
"However, I decided that it's the perfect time in my rugby career to experience something new and challenge myself in a different culture and environment."
Toolis, who has made 127 appearances for Edinburgh and won 26 international caps, declared his time in Scotland a success.
He said: "When I joined the club in 2013, I was so nervous to uproot my life and move across the world but I was also extremely hopeful that a career in professional rugby would be all that I imagined.
"I'm pleased to say that my time at Edinburgh has completely surpassed all my expectations. I am extremely fortunate to have been part of this historic club and to have played over 100 games for Edinburgh is a huge honour for me and it's something I am extremely proud of.
"I have been so lucky to explore and play in so many different countries and stadiums during my tenure at Edinburgh but receiving my 100th cap at BT Murrayfield in our 1872 Cup win (in 2018) was something I'll never forget.
"However, the biggest highlight of my career so far is the people I have met and the friendships that I have formed. The Edinburgh boys have really made my last nine years such an enjoyable experience."
Toolis is currently recovering from a knee injury and has not featured for Edinburgh since June. However, he is hoping to return to action early in 2022 before his move to Japan.
He said: "I want to finish my time on a high and contribute in any way I can to help continue the momentum the club has built so far this season."