Forlan, who last played professionally in 2016 for Indian Super League side Mumbai City, will arrive in Hong Kong Wednesday and will be unveiled at an official press conference the following day.
The 38-year-old, who played 112 times for Uruguay and won the Golden Ball Award for the best player at the 2010 World Cup finals, finished as the top scorer in Spain's La Liga while with Villarreal in 2005 before going on to join Atletico Madrid.
Hong Kong champions Kitchee are appearing in the group stages of the Asian Champions League for the first time and their campaign will kick off on Feb 13.
(Reporting by Michael Church in Hong Kong, Editing by Amlan Chakraborty)
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