Sexton's Leinster coach Joe Schmidt has revealed that the offer made to the 27-year-old was "exceptional, even by French standards".
The Irish Rugby Football Union has confirmed that Sexton will not be renewing his contract with them to keep playing full-time in Ireland from the end of this season.
"We are very disappointed, as we know the Irish rugby public will be, that Johnny Sexton will not be playing his rugby full-time in Ireland from next season," IRFU chief executive Philip Browne said.
"Johnny is a major talent and his full-time presence in Ireland will be missed, particularly by Leinster. We wish him continued success with his career."
While we remained in the fight right up until the last possible moment to keep Johnny in Ireland with a very strong offer, ultimately, we had no option ...
Philip Browne, IRFU
Browne added that the IRFU had simply been priced out of the fight to keep Sexton.
"Ultimately, following negotiations with the player's agent, we had no option but to take the decision that it would not be in the best interest of Irish rugby to chase the reported financial incentives being offered," he said.
Sexton has won 34 caps and is a firm favourite to be the British and Irish Lions Test fly-half against Australia later this year.
While Sexton will remain a pivotal player for Ireland, his departure is a major blow for Leinster.
He played a key role in helping them win three European titles in the last four seasons, starring when they won finals against Leicester, Northampton and Ulster.
I know that it was still a tough decision for him.
Joe Schmidt, Leinster
The news comes less than a week after Leinster made a Heineken Cup pool stage exit.
They were edged out of the final Heineken quarter-final spot by fierce rivals Munster and they will now feature in the second-tier Amlin Challenge Cup last eight, tackling Wasps in early April.
"Naturally, I'm disappointed," Schmidt said.
"I've really enjoyed Johnny's input over the last few years, and he has added tremendous value to the Leinster environment both on and off the field."
Sexton is understood to join Wales and Lions centre Jamie Roberts as Racing Métro's big arrivals, although the Paris-based side have yet to comment on the move.