The Chile international has featured 17 times for Malaga this season, scoring once, and will move to BC Place on a free transfer to become their Designated Player.
Morales, 28, lists Universidad de Chile and Dinamo Zagreb among his former clubs, and Whitecaps head coach Carl Robinson is eager to see his new signing in action in the MLS.
"Pedro is an exciting attacking player and we are thrilled to have him join our club," Robinson told the club's official website.
"He is a natural number 10 who will bring a creative flare to our attack and is someone the supporters will enjoy watching."
Morales has three goals from 11 international caps and made 22 league appearances during his two seasons in the Spanish top flight with Malaga - scoring four times.
Robinson's Whitecaps get their MLS campaign underway on Sunday against New York Red Bulls at BC Place.
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