In doing so, 28 year old Narraway will join current Gloucester team mate Alasdair Strokosch who is also moving to the French side.
Worcester born Narraway has spent his entire professional career with Gloucester, making his debut at the end of the 2002-3 season.
He represented England at U18, U21 and Saxons level before making his full international debut against Wales at Twickenham in the 2008 Six Nations Championship.
He has gone on to make more than 150 first team appearances for the Cherry and Whites and was named club captain for the 2011-12 season.
Head Coach Bryan Redpath today confirmed Narraway's departure and wished him well for the future.
"Luke has signed for Perpignan and will be leaving us at the end of the season. He's been a fine player for Gloucester Rugby and I know has enjoyed the challenge of captaincy this season.
"He's been with us for a long time but it's the nature of the game that people move on to pastures new. I think he'll do well in France and will go with our best wishes.
"In the meantime, he'll be making the most of every moment in a Gloucester shirt and doing his bit to make this season as successful as possible."
Narraway himself admitted it would be difficult to leave his only club but that he's looking forward to the next stage of his career.
"It will be strange to leave because Gloucester has been my only club, but moving to Perpignan is going to be a tremendous experience both on and off the pitch.
"I've obviously still got unfinished business here in a Gloucester shirt, but would like to thank everyone who has helped me to get where I am today.
"I will miss the club. I'll miss Kingsholm and, of course, the amazing supporters. Gloucester's will always be the first result I look out for and I wish them every success in the future."