"This is truly one of the toughest days of my life," said Leipold. "I poured my heart and soul into this franchise for 10 years."
The sale must be closed by June 30. Approval before that date from the NHL's board of governors would be required.
Attendance at Predators home games in 2006-2007 averaged just over 13,500 - 2,000 below the NHL average, even with some of the lowest ticket prices. The team amassed 110 points - third-best in the league - but still lost US$15 million.
"It's time to give someone else the chance to take the Nashville Predators to the next level," Leipold said during a news conference.
Leipold predicted that "we'll have hockey here for a long time" if attendance improves. A default clause in the team's arena lease can be triggered June 19 to give one-year notice of departure if attendance remains below 14,000 during the 2007-2008 season.
"I have come to the conclusion I can not make it work here," said Leipold.
There has been plenty of speculation about the team's future in Nashville.
Balsillie, who went through a sale process with the Penguins, said he is respectful of all the "due diligence" required before the deal can close.
"This is still Craig Leipold's franchise until the deal is completed, so for me to comment at this time on any number of topics relative to the franchise would not be appropriate," Balsillie said in a statement.
He said he planned to visit Nashville, talk with Predators fans and "become more familiar with the community" once the deal is final.