Toyota opened the facility in the South Bay in 1982 and currently employs approximately 5,000 people.
The city of Torrance said in a statement that it is disappointed by the news.
"The announcement will impact thousands of employees and have a significant economic impact to not only Torrance, but the region, and the great State of California," the city said in a press release.
While the move will not happen for a few years, the company will break ground on the new environmentally-friendly headquarters in Plano, Texas, this year.
According to the automaker, the new headquarters will bring together 4,000 employees who are now scattered around the country. That includes 2,000 employees in Torrance, 1,000 employees at Toyota's engineering and manufacturing center in Erlanger, Ky., and 1,000 employees at Toyota Financial Services.
"With our major North American business affiliates and leaders together in one location for the first time, we will be better equipped to speed decision making, share best practices, and leverage the combined strength of our employees," said Jim Lentz, Toyota's CEO for North America.
Lentz said any employee who wants to move will be given a relocation package and retention bonus. The company is also offering to send employees and their spouses or partners to the new locations to look for new homes.
"Although we are disappointed with today's announcement, Torrance is a progressive and forward looking city and we welcome the challenge of growing new opportunities to other corporations that are seeking a new home in southern California," Torrance Mayor Frank Scotto said in a statement. "Torrance is excited about any new businesses joining our beautiful Southern California city."
Scotto said at a news conference Monday that the city has long used every tool available to them to attract and keep companies like Toyota in Torrance, but the city can't compete with what the state of Texas is offering.
"We hope that everybody understands that Torrance has done everything we can to keep [Toyota] here," Scotto said at a news conference.
In February, Texas Gov. Rick Perry launched a campaign to lure California businesses away and visited California twice to speak to Toyota officials. Perry said the state offered Toyota $40 million in incentives from the taxpayer-funded Texas Enterprise Fund.
The Associated Press contributed to this report.