Goalkeeper Howard, 37, had seen his relationship with Everton supporters deteriorate and has been kept out of the side by Joel Robles since January.
He is also keen to return to the US, where he started his career with New York Red Bulls, for family reasons.
Howard had previously stated his intention to retire from football when his contract at Goodison Park expires in 2018, but he will join Colorado on July 4 when the MLS transfer window opens after a decade at Everton.
“I will remain an Evertonian for life. This will always be my team, my Club,” he said.
“I sacrificed so much to play the amount of games I have over a 10-year period, so I will continue to support this Club that I love.