"I've decided to become a member of the Houston Rockets," said Howard, who is expected to sign with the Rockets on July 10 when the NBA's free-agent signing period begins.
"I feel it's the best place for me and I am excited about joining the Rockets and I'm looking forward to a great season. I want to thank the fans in Los Angeles and wish them the best."
The Lakers earlier confirmed they had lost the battle to retain the 27-year-old, who moved to Los Angeles from the Orlando Magic in a blockbuster 12-player trade in August 2012.
"We have been informed of Dwight's decision to not return to the Lakers. Naturally we're disappointed," Lakers general manager Mitch Kupchak said.
"To Dwight, we thank him for his time and consideration, and for his efforts with us last season. We wish him the best of luck on the remainder of his NBA career."
Free agent Howard, who had also been courted by the Dallas Mavericks, the Atlanta Hawks and Golden State Warriors, favoured a move to Houston despite the prospect of a substantial paycut.
He would have been eligible to sign for five years and $118 million with Los Angeles or four years and $88 million with any other team.
Howard had also informed the Mavericks, the Hawks and the Warriors earlier on Friday that he would not be signing with any of them.
A three-time NBA defensive player of the year, popularly known as 'Superman' for his athletic prowess, Howard consulted all five teams earlier this week.
The Lakers met with Howard on Tuesday and their pitch focused on how they would be able to embellish his brand off the court while returning on-court greatness to a franchise that has piled up 16 NBA championship titles.
Lakers All-Star Kobe Bryant, a five-time NBA champion, played a key role in the woo-ing.
However, Bryant and Howard did not always see eye-to-eye last season under the guidance of coach Mike D'Antoni, and the Lakers were eliminated from the first round of the play-offs.
The prospect of being the kingpin on an ambitious Rockets team which also includes James Harden, Chandler Parsons, Jeremy Lin and promising center Omer Asik was always likely to be an alluring one for Howard.
His arrival in Houston makes the Rockets genuine contenders for the Western Conference championship.
- Sports & Recreation
- Houston Rockets
- The Lakers