The current system was agreed in 2001 following the Bosman ruling but FIFPro claims it is still preventing freedom of movement of players.
If successful a challenge would trigger a revolution in the way players are still bought and sold. Free transfers of players in many of the top leagues remain rare events but FIFPro are determined to make it easier for players to move clubs in a similar way that other workers can move from one firm to another.
The challenge is likely to be fiercely opposed by the clubs but the union says it will take its case to the European Commission, the European Court of Justice and human rights' courts.
It also claims sanctions for breaches of contract are "exorbitant" compared with any other industry.
FIFPro president Philippe Piat said: "The transfer system fails 99% of players around the world, it fails football as an industry and it fails the world's most beloved game.
"Football's governing bodies, clubs and leagues claim the transfer system is necessary to ensure competitive balance, whereby in fact it creates a spiral of economic and sporting imbalance, which only benefits the richest 1% of clubs and player agents.
"These legal and monetary shackles binding footballers to their current clubs can no longer be accepted and upheld."
Piat said the union will fight for players to have the same rights as all other workers in Europe.
FIFPro claim 28% of all the money from transfer fees ends up in the pockets of agents and that many players are not paid on time, or even at all.
Bobby Barnes, the PFA deputy chief executive and European president of FIFPro, said the current system encouraged third-party ownership of players which is banned in the UK. It is common in South America, Spain and Portugal, and players are 'owned' by a businessman or company who benefits from any transfer fees and image rights.
Barnes said: "In the absence of competitive balance the system encourages speculative, unsustainable, immoral and illegal investment models like third-party ownership of players."
FIFPro said it would continue to talk to FIFA, UEFA, the European Clubs' Association (ECA) and the leagues but warned they expect changes.