Speculation surrounding Zidane’s future had been rife in recent weeks and the Frenchman at a point had to deny rumors that he had informed his players of his intentions to leave.
Zidane was in his second spell as Real Madrid manager and still had a year remaining on his contract.
The 48-year-old won three Champions League trophies and one La Liga in his first spell as manager. He added another La Liga title in his second spell in charge of the club.
However, Los Blancos went trophyless for the first time in 11 years this season, finishing second on the La Liga table and getting knocked out of the Champions League at the semi-final stage by Chelsea.
In a statement on their official website, the 13-time European champions said: Real Madrid announces that Zinedine Zidane has decided to end his current spell as coach of our club.
"It is now time to respect his decision and show him our appreciation for his professionalism, dedication and passion in all these years, and for what he represents for Real Madrid.
"Zidane is one of the great heroes of Real Madrid and his legend goes beyond what he has been as a coach and player of our club.
"He knows that he is at the heart of Real Madrid, and that Real Madrid is and will always be his home."
