The 43-year-old defenseman, the oldest player in the NHL, was an unrestricted free agent after playing 14 seasons for the Boston Bruins, all as their captain.
Chara scored 14 points (five goals, nine assists) in 68 games last season and had two assists in 13 Stanley Cup Playoff games.
"My family and I have been so fortunate to call the great city of Boston our home for over 14 years," Chara wrote on Instagram. "Recently, the Boston Bruins have informed me that they plan to move forward with their many younger and talented players, and I respect their decision. Unfortunately, my time as the proud captain of the Bruins has come to an end."
Chara, who has played 22 NHL seasons, helped Boston win the Stanley Cup in 2011 and reach the Cup Final in 2013 and 2019.
"Zdeno's dedication to the game, his teammates and Bruins fans has been everything we could have hoped for in a player and specifically as our captain for 14 years," Bruins president Cam Neely said in a statement. "His achievements -- which are too many to list both on and off the ice -- will forever be a part of Bruins history.
"On behalf of the Bruins organization, I want to thank Zdeno for all that he has done for the Bruins. … The Chara family will always remain Bruins."
Chara was the longest-tenured captain in the NHL, but Boston planned to reduce his role this season because it wants to work some younger defensemen into its lineup. So Chara turned down the Bruins' contract offer and decided to move on.
"We had certainly offered a contract to Zdeno months ago and he indicated he wanted time to continue to work through, again, where he felt he was at, where the League was at in the Return to Play protocols and what the role we were describing and hoping to integrate him into with our hockey club as we saw it and our internal plans and discussions were moving forward," Bruins general manager Don Sweeney said Thursday. "Make no mistake about it, that did include looking to integrate some of the younger players that have had an opportunity to develop in our system and us trying to see whether or not they were capable of handling minutes and situations that they had not been exposed to.
"So we describe it as an integrated role and just didn't make a categorical promise that he would have the exact same role that he had had in certainly his 14 (seasons) -- a historic career with the Boston Bruins. It's very sad. It's un-rewarding in the aspect of the job to see a player like that choose to leave."
Chara's departure creates an opening that will give young left-shot defensemen the opportunity to compete for a regular role in the NHL, such as Jakub Zboril, 23; Jeremy Lauzon, 23; and Urho Vaakanainen, 21. Chara was second on the Bruins last season with an average of 21:01 of ice time per game, behind defenseman Charlie McAvoy (23:10).
"You know we do want to take a look at some of these young left-shot D's that we have in our system, see if they can step up, or is it the time for them to step up and see where they're at in their development," Neely said Dec. 21.
Chara gives the Capitals another left-shot defenseman with Brenden Dillon, Dmitry Orlov, Jonas Siegenthaler and rookie Martin Fehervary on the left side. Washington also signed defensemen Justin Schultz and Trevor van Riemsdyk, who are right-hand shots, this offseason.
The Capitals allowed 3.44 goals per game after Dec. 22 last season, 29th in the NHL during that span.
"We are extremely pleased to have Zdeno join the Capitals organization," general manager Brian MacLellan said. "We feel his experience and leadership will strengthen our blue line and our team."
Chara can also help the Capitals penalty kill, which was sixth in the NHL last season at 82.6 percent. The big defenseman (6-foot-9, 250-pounds) averaged 3:11 of shorthanded ice time last season and helped the Bruins finish third in the NHL on the penalty kill at 84.3 percent. Chara's 101 blocked shots were second among Bruins defensemen behind McAvoy's 131.
Chara won the Norris Trophy voted as the best defenseman in the NHL in 2008-09 and has been selected to play in six NHL All-Star Games. Chara has been named to the NHL First All-Star Team three times and the Second All-Star Team four times. In 2010-11, he won the Mark Messier Leadership Award for qualities on and off the ice.
With the Capitals and Bruins in the East Division this season, Chara will face his former team as many as eight times; the first game is Jan. 30 in Washington. The Capitals makes their first visit to Boston on March 3.
Chara is sixth in Bruins history in games (1,023) and third in points by a defenseman (481; 148 goals, 333 assists) behind Ray Bourque (1,506) and Bobby Orr (888).
"It's hard to put it into words," McAvoy said Monday. "He's just done everything for me, from the moment I got here to now, just helping me grow so much as a player and a person. And just the way he carries himself. I've learned so many good habits, so many, so many things. Just how to be a professional, how to treat people, how to behave in certain settings. And there's nobody who I would rather learn those things from, and I'm so incredibly thankful and lucky to have played with him and to have learned those things from him. It's not something that I take for granted."
Selected by the New York Islanders in the third round (No. 56) of the 1996 NHL Draft, Chara has scored 656 points (205 goals, 451 assists) in 1,553 games with the Bruins, Islanders and Ottawa Senators, and 70 points (18 goals, 52 assists) in 195 NHL playoff games.
"As I begin this next chapter, I want the people of Boston to know how proud I was to be a Bruin and how grateful I am for all of the support over the years," Chara wrote. "'Thank you' does not seem adequate to express my sincere gratitude. I will always be a Bruin. I will always love Boston."
NHL.com staff writer Amalie Benjamin contributed to this report