The Demons have swapped their first round NAB AFL Draft selection (No.12 overall) for the ruckman/forward in the most intriguing deal of the player exchange period.
Melbourne said via its Twitter account late on Saturday night that Clark would join the club on a four-year contract.
Although it is unclear whether the rumoured deal of $2.2 million over four years is accurate, Clark's original suitor Fremantle released a statement just before midnight (AEST) on Saturday saying it could not outbid Melbourne for his services.
"If we were to match Melbourne's offer to Mitch it would make him the highest paid player at our club over the next four seasons and we are not prepared to compromise our list management model to achieve that outcome," Fremantle list manager Chris Bond said in the statement.
"It's disappointing that Mitch has decided not to follow through on his commitment to sign with Fremantle.
"We accept his decision and wish him all the best for the future. The club looks forward to entering the national draft with two first round selections in picks 16 and 20."
After six seasons in Brisbane, Clark requested a trade back to his home state Western Australia - preferably to Fremantle - not long after the Lions' season ended in September but the two clubs have been unable come up with a suitable deal.
First West Coast and then Melbourne entered the fray as a stalemate ensued, with the Demons on Wednesday offering a lucrative long-term contract for Clark as well as a better trade deal for the Lions.
But on Friday Clark and Fremantle made a joint statement reaffirming their desire to be united. Clark also clearly underlined his intention to knock back Melbourne's offer.
"I respect and genuinely appreciate the interest shown by Melbourne but these decisions are not always about the financial side of things," Clark said in the statement.
"I've been saying for quite some time now that I want to return home to WA and play for Fremantle.
"Despite the highly attractive offer Melbourne have put on the table, I remain firmly committed to returning to Perth to be with my family and to signing with Freo."
Melbourne is expected to release more details on the trade on Sunday.
No trades are official until paperwork has been accepted by the AFL and formally recognised after 2pm on Monday, October 17.
Follow our complete coverage of the 2011 AFL exchange period from October 10-17. Join the AFL trade conversation on Twitter: use #tradeweek in your tweets
