The Spaniard joined the English club in the summer of 2016 after successful years as a coach first at Barcelona and then at Bayern Munich.
In total, he has led City to 17 major titles - including six Premier League victories, one Champions League victory, three FA Cup titles and five League Cup victories.
"Don't ask me why I'm leaving. There's no reason, but deep down I know it's time. Nothing lasts forever, but if it did, it would be here," says the 55-year-old.
His last game will be on Sunday at home against Aston Villa at the Etihad Stadium in the final round of the Premier League.
It is already clear that Manchester City will finish second in the league behind Arsenal. The London club became champions on Tuesday when City only managed a draw against Bournemouth.
