The President of the Argentine Rugby Union, Marcelo Rodriguez, said the cancellation of the 2020 edition of Super Rugby and the subsequent loss of TV, sponsorship and ticket revenue, meant there was no way to keep their best players in Argentina.
"We had to be straight with the players so they know the situation, with the uncertainty and the huge impact in the southern hemisphere," he said.
The Jaguares had effectively operated as a shadow Argentina squad since joining Super Rugby in 2016 and last year finished runners-up to the Crusaders.
This year's tournament was suspended in March with just seven of the 18 rounds played.
Australia and New Zealand have since started domestic editions, while South Africa are hoping to get a competition up and running before the end of the year.
Jaguares coach Gonzalo Quesada has already left to take over at Stade Francais and eight senior players, including the last two captains, Agustin Creevy and Jeronimo de la Fuente, have joined European clubs.
Governing body SANZAAR still hopes to play a Rugby Championship test tournament in New Zealand in November.
Argentina's Pumas have selected almost exclusively home-based players for the last few years but Rodriguez said coach Mario Ledesma would be given the freedom to choose his squad from further afield.
"I understand the context and we respect the decisions (of the players to leave) because they have more convenient scenarios," Rodriguez said.