The 43-year-old Slovak defenseman, who in 2011 became the second European-born captain to win the Stanley Cup, agreed to a $795,000 contract to join the Capitals for what will be his 23rd season in the NHL.
"We are extremely pleased to have Zdeno join the Capitals organization," Capitals general manager Brian MacLellan said. "We feel his experience and leadership will strengthen our blueline and our team."
Chara, who at 6-foot-9 is the tallest player ever to play in the NHL, has received several individual accolades during his career, including in 2009 when he was awarded the Norris Trophy as the league's best defenseman.
A six-times NHL All-Star, Chara represented Slovakia on several occasions, including the 2006, 2010 and 2014 Winter Olympics. He carried Slovakia's flag during the 2014 Opening Ceremony in Sochi.
Chara, whose last season with the Bruins ended in a second-round playoff loss to the eventual Stanley Cup champion Tampa Bay Lightning, was a fan favourite in Boston where he was a force in all three zones.
"My family and I have been so fortunate to call the great city of Boston our home for over 14 years," Chara wrote on Instagram.
"Recently, the Boston Bruins have informed me that they plan to move forward with their many younger and talented players and I respect their decision.
"Unfortunately, my time as the proud Captain of the Bruins has come to an end."
(Reporting by Frank Pingue in Toronto, editing by Ed Osmond)