Both clubs confirmed the news on Monday morning, with Nikorima now an outside chance of lining up for the Rabbitohs when the two clubs meet this weekend during magic round at Suncorp Stadium.
The Rabbitohs have locked Nikorima down on a deal for the remainder of this year, while the deal has a player option for the remainder of 2023.
It means that Nikorima is immediately free to continue negotiating his future for 2023, but could also elect to stay in Jason Demetriou's squad at Redfern.
Moving to South Sydney will likely see Nikorima go into immediate contention for a bench spot, with Siliva Havili currently filling in the utility role, but Nikorima able to play in the backline, giving him an added advantage.
Nikorima had made it previously clear to the Warriors he was not going to Auckland with the club in 2022 once his contract had expired, preferring to stay in Australia.
Warriors general manager of football Craig Hodges said the club weren't going to stand in Nikorima's way.
“We were committed to having Kodi for the rest of the year but he and his management requested an immediate release,” Hodges said.
“He wanted to take up an offer elsewhere. Given the circumstances we weren’t going to stand in his way.
“We thank Kodi for the contribution he has made to the club over the last three years and wish him and his family all the best for the future.”
The Warriors releasing Nikorima comes after the recent signing of Daejarn Asi, who has spent his first two weeks at the club in the starting 13, playing in the halves following an injury to Chanel Harris-Tavita.
Rabbitohs head of football Mark Ellison said Nikorima will add to the club's depth.
“He will add depth to our side across many facets of the game and we feel he can bring another dimension to our attack as well as strength to our defence when he is on the field," Ellison said.
“His experience will also be valuable to many of the young players we have in our squad. We look forward to seeing Kodi in our cardinal and myrtle jersey this season.”
The 145-game 28-year-old has scored 33 tries in his career, and has previously played for the Brisbane Broncos, as well as his now completed three and a half year stint at the Warriors.
Born in Palmerston North, Nikorima has also played 15 Tests for New Zealand.
The utility will link up with his new teammates early this week.