The 19-year-old, who joined the Cottagers in 2010, has decided to return to his home country in search of regular first-team football.
Fulham boss Martin Jol told reporters: "Kerim has progressed well through his time in the Academy and into the fringes of the first team, which enabled him to play for the Turkish national team, which is a big thing for him.
"But for him to continue this progression and to really fulfil his potential he needs to play week in, week out, and I couldn't offer him that as part of the first team here, so we decided to accept the offer from Besiktas.
"He's sure to have a big impact back in Turkey and I know that on a personal level it's a good option for him."
Frei, who made 33 appearances for Fulham, has put pen to paper on a five-year contract in Istanbul.