The move was confirmed by both parties, with the English Premiership side saying the French club had paid a 'significant' transfer fee to secure a player who had two years remaining on his contract.
"The 31-year-old has received a proposal from Montpellier which will underpin the future financial stability for his family," Northampton said in a statement.
The club said it had agreed the transfer reluctantly and the fee -- which British media put at around 900,000 pounds -- would be reinvested into the playing squad, with the Saints looking for new signings.
Picamoles told the French club's website (www.montpellier-rugby.com) that it had been hard to refuse the approach at his age.
"Montpellier is my town, it's the club that made me the player I am today," he said. "I've signed for three years, it will probably be my last contract.
"It was something important for me to finish my career at Montpellier, and also for my family. I met my wife in Montpellier, and we see our life after rugby here."
The player joined Northampton from Toulouse on a three-year contract in 2016, having played at Montpellier for five years until 2009.
(Reporting by Alan Baldwin; Editing by Hugh Lawson)
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