The 34-year-old represented Real Madrid between 2001 and 2024, progressing through the academy system to first-team level in 2011, and he made 364 appearances for the capital giants.
Nacho was a vital player for Los Blancos last term, making 45 appearances in all competitions, but the centre-back decided against penning a new contract with Carlo Ancelotti's side.
The Spain international has instead made the move to Saudi Pro League outfit Al Qadsiah, and he opened up on his exit during a farewell ceremony on Wednesday.
"It is a different, difficult, beautiful and emotional day. I could tell thousands of stories, but I prefer to thank you for everything you have given me," said Nacho.
Nacho thanks Real Madrid in emotional ceremony
"Real Madrid taught me how to win and lose, but above all how to live. Thanks to the club I have achieved the determination that characterises me.
"I've taken the same route to play and train for 20 years. Leaving my house to get to the other house and getting to my other family.
"It's the most beautiful ending I could have imagined: being captain and an important part of the team. And also having the honour of lifting the 15th European Cup.
"I am and will be happy. I feel the luckiest canterano of all since I arrived here. Many thanks to the fans, who have always loved and supported me. Thank you [president] for waiting for me to have my future closed. I will never forget it.
"Thank you for taking care of me and understanding me so much, but above all for forming this great family. Don't worry, Real Madrid will always be our home."
Perez calls Nacho 'one of the club's great players'
Meanwhile, Real Madrid president Florentino Perez added: "Dear Madridistas, today is an emotional day. One of our great players has decided to end his Real Madrid career. Dear Nacho, we are proud of you. You came here when you were a kid and since then you played in every category of Real Madrid.
"Nacho, you became a first-team player in 2012 and realised your dream. You managed to become the player with the most titles in the history of Real Madrid and you have won six Champions League. You're a legend, an example for everyone. We will never forget."
Nacho won four La Liga crowns, two Copa del Rey trophies and six Champions League titles during a glittering career in the Spanish capital.
The centre-back took on a more prominent role for Los Blancos last term due to long-term knee injuries for David Alaba and Eder Militao, and he had been tipped to sign a new contract with the Spanish and European champions before his exit was confirmed.