The American point guard, who led the Breakers to two championships in his two seasons in New Zealand, has signed with the 15-time Slovenian League champions until the end of the 2013/14 season.
Union Olimpija, who have won eight of the last nine titles, announced the deal on their website and said the contract includes a clause which allows Jackson an early exit if an NBA team comes calling.
Jackson has long held the ambition of returning to the NBA, impressing in the Summer League during the last two off-seasons but unable to earn a contract.
The 27-year-old has previously had brief stints for three NBA teams and his chances of returning will be significantly aided by plying his trade in Europe, rather than in the Australian NBL.
Notable former member of the Olimpija squad who have gone on to play in the NBA include San Antonio Spurs guard Danny Green, who last season set a record for most made three-pointers in the NBA Finals, and New Zealand-born Australian Aron Baynes.
The Breakers, meanwhile, will be stepping up their search to replace Jackson after the player gave them the news on Friday, with the new Australian NBL season getting underway in October.
