Farrell had a year left on his contract with the Blue Jays, the team he managed the past two seasons after departing his pitching coach post in Boston, a role he served from 2007-10.
The Red Sox sent shortstop Mike Aviles to Toronto as compensation and received right-handed pitcher David Carpenter in return.
"Wanna thank #RedSoxNation for all the support, great city, team and fans! Loved my time there but now it's time for a new chapter! #gojays," Aviles wrote from his Twitter account.
About 10 days ago, Blue Jays general manager Alex Anthopoulos had a candid chat with Farrell. At that point, Farrell let it be known that if the Boston opportunity presented itself, he wanted to pursue it.
Anthopoulos told Farrell he had to hear from the Red Sox first, and that the matter couldn't drag out much longer. A day or so after that conversation, Red Sox owner John Henry called Blue Jays president Paul Beeston to discuss making a trade for Farrell. And the teams made gradual progress until making a deal on Saturday that became official on Sunday afternoon.
"This was, as John explained it to me, a dream job for him, an opportunity he really wanted to pursue," Anthopoulos said in a Sunday afternoon conference call. "So we felt if there was a deal that made sense for our club as well, we were going to try to go ahead and complete that. So we never really got that far [as an extension]. That's really the chain of events."
Farrell's introductory news conference as Boston's manager could come as early as Monday, and most certainly before Wednesday, when the World Series starts.
Major League Baseball discourages teams from making any significant announcements during the World Series.
The Red Sox had interviewed four other candidates to be their next manager. Dodgers third-base coach Tim Wallach was first to interview for the position, followed by Yankees bench coach Tony Pena, Padres special assistant to the general manager Brad Ausmus and Orioles third-base coach DeMarlo Hale.
That quartet impressed Red Sox general manager Ben Cherington and other members of the team's brass.
But it seemed obvious from the outset that Farrell was the team's top target.
"We met some outstanding managerial candidates in this process," Red Sox president/CEO Larry Lucchino said in the statement. "John Farrell brings a unique blend of managerial experience, leadership and presence, pitching expertise, front office experience, and an established track record with many members of our uniformed staff and members of our front office. He will hit the ground running."
After Terry Francona parted ways with the Red Sox following the 2011 season, the club tried to pry Farrell from Toronto.
However, Farrell had two years left on his contract with the Blue Jays at that time, and Toronto even instituted a new club policy that prohibited employees from leaving the organization for a lateral move. The only way the Blue Jays would have considered letting Farrell go a year ago is if the Red Sox had supplied righty Clay Buchholz as compensation.
"I probably don't even want to go down the path of last year. There's enough that's gone on this offseason with this transaction," Anthopoulos said. "I'm not looking to add more to this story or another dynamic. Obviously, it's been a story that started last year, it died, and then it continued I guess in the month of August. Today, I prefer to talk about what did occur and what happened. That's what happened this past offseason. I'd probably rather just leave it at that."
Now, Farrell will manage a team that includes Buchholz and Jon Lester, two pitchers who threw no-hitters and had the best seasons of their career under his watch.
"Welcome back John!! Can't wait to get back to work!! #RedSox," tweeted Lester.
During his first stint in Boston, Farrell also developed strong relationships with two of the team's most important position players -- David Ortiz and Dustin Pedroia.
"I love John. John is my main man, even when he was the pitching coach. We needed something different," Ortiz told ESPNBoston.com. "I think you're going to notice a difference. We need somebody to increase the way things are around here and John's the guy. I'm excited."
Farrell and Red Sox assistant general manager Mike Hazen used to run the Indians' farm system together. Farrell also has a strong relationship with Cherington.
The 50-year-old Farrell spent the past two seasons as Toronto's skipper, compiling a 154-170 record.
The Red Sox dismissed Bobby Valentine after just one season, in which the team finished 69-93.
That opened the door for Farrell to make his return to a city and an organization he has often expressed fondness for.
"We are thrilled to name John Farrell as our new manager," Cherington said in the statement. "John has been a Major League pitcher, front office executive, coach, and manager. His broad set of experiences, and exceptional leadership skills make him the ideal person to lead our team. I have known him in various capacities throughout my career, and I hold him in the highest regard as a baseball man, and as a person."
In Aviles, the Red Sox gave up a player who played well on defense in 2012 and had some pop (13 homers) for a shortstop, but had a low on-base percentage (.282). Boston might turn the shortstop position over to prospect Jose Iglesias for next season. Xander Bogaerts, the top prospect in Boston's organization, is also a shortstop and probably a couple of years away from reaching the Majors.
"If you look at the free-agent market right now with respect to shortstop, second base, it's just so thin," said Anthopoulos. "The fact is that Mike does have control past this year. He is a hard-nosed player. He is a gamer. He's not without his flaws, if you look at the on-base and so on, but he is a high-energy player."
Carpenter, who would have been taken off of Toronto's 40-man roster this offseason, is 1-5 with a 5.70 ERA in 67 career appearances, all of which have been out of the bullpen.
With the compensation settled, Farrell will now get to embark on his dream job.
"Again, this is something that John wanted," Anthopoulos said. "From that standpoint, once he told us that he wanted it, and this was something that he wanted to pursue, at that point, it made sense for us to at least look into it with no guarantees and no assurances. If we could do something that made sense, it didn't make sense for us to hold him back if we couldn't work something out.
"It's not completely foreign to me why there's an appeal there and why there would be a desire on his part, that this was the one job. That's how he expressed it to me: This is the one job. There was no other city for him that was more of a perfect fit and a perfect opportunity."