Chivas were cut from the American league they first joined in 2004 on Monday, with the MLS outlining its eagerness to expand operations in Los Angeles.
A sister club to Mexican side Chivas Guadalajara, they will now be replaced by Los Angeles FC - with the new franchise officially announced in Hollywood on Thursday.
The club is scheduled to participate from 2017, with Henry Nguyen, Peter Guber and Tom Penn forming part of an ownership group.
Behind them are a host of famous faces, with QPR co-owner Ruben Gnanalingam and Cardiff City owner Vincent Tan among a number of partners.
They join former Los Angeles Lakers star Earvin 'Magic' Johnson and US women's football legend Mia Hamm in getting behind the venture, with 'LAFC' set to rival LA Galaxy for support in the west-coast city.
"We are thrilled to welcome Henry Nguyen, Peter Guber, Tom Penn and their owner partners to Major League Soccer," said MLS Commissioner Don Garber.
"This visionary ownership group will chart a course that will further elevate the sport in this great city and, combined with a new state-of-the-art stadium, accelerate us down the path toward becoming one of the top soccer leagues in the world."
The MLS is set to become a 22-team league by 2017 with a new franchise in Atalanta also due to begin that year after Orlando City and New York City make their respective bows in 2015.