Toronto gets a first-round pick (15th overall) in the 2014 MLS SuperDraft and a third-rounder in 2016. The Red Bulls also get a second-round 2014 pick (21st overall) in the deal.
Toronto had opted not to pick up the contract option on Convey, who made US$215,000 this season.
Combined with Spaniard Alvaro Rey, Convey gave Toronto a good attacking option on the flank. But TFC was looking for a smaller contract and perhaps more speed.
Friday's deal involved the rights to Convey but the Red Bulls wasted little time signing the U.S. international to a new contract.
"Bobby is a very experienced player who we believe can make an immediate impact on our squad,” Red Bulls sporting director Andy Roxburgh said in a statement. "We have been looking at him for some time, and he will add quality on the flanks. Bobby's technical ability will certainly provide us an added dimension."
The 30-year-old winger Convey made 21 appearances for Toronto, scoring one goal and adding four assists after being acquired in a trade with Sporting Kansas City in May.
Convey began his career in 2000 with D.C. United at the age of 16, the youngest player to sign with Major League Soccer at the time. He was the fourth-leading vote-getter for the 2001 MLS all-star game at the age of 18.
He played for England's Reading from 2004 to 2009 before returning to MLS and signing with the San Jose Earthquakes.
He won all-star honours in 2010, when he was named MLS Comeback Player of the Year, and 2011.
Convey has 46 caps with the U.S. team.
The deal restores a first-round pick in 2014 for Toronto, which had traded its first-rounder to Vancouver last year in the trade that netted TFC the now-departed striker Eric Hassli.