Klopp, who led Dortmund to two Bundesliga titles and the Champions League final in 2013, will see out what has been a frustrating season for the club but leave on 30 June.
“I have said over the years that when I have the feeling I am no longer the perfect coach for this extraordinary club, I’d say it,” said Klopp, whose contract was due to expire in 2018. “We reached the decision together. You can’t imagine how difficult it is when you have something so wonderful as here.”
The club have not yet identified a successor to the 47-year-old, nor would it comment on speculation linking former Mainz coach Thomas Tuchel with the post.
“Safety first,” Dortmund chief executive Hans-Joachim Watzke said.
Klopp took over at Dortmund in 2008, led the club to the Bundesliga title in 2011, the league and German Cup double the following year, and the Champions League final in 2013.
Dortmund were runners-up to Bayern Munich in the Bundesliga in 2013 and 2014 but their form has slumped this season. The club made their worst ever league start and were in last place in February before carving out some breathing space with a seven-game unbeaten run. However, they remain 37 points behind Bayern Munich with six Bundesliga games remaining.
“The steps we took this season weren’t big enough,” Klopp said.
The meek Champions League exit to Juventus in the last 16 also increased the pressure. Dortmund have only the German Cup and European qualification to aim for this season.
“My last dream is to get the best possible position in the table and to celebrate one last time, for a good reason, on Borsigplatz,” said Klopp, referring to the Dortmund square where the club celebrates titles with fans.
Klopp, who has been linked to clubs in England and Spain, said he has “nothing in the hand” from any other team and had no plans for a sabbatical, “though it could of course be that I have to take one, or whatever a free half-year is called, I don’t know”.
A visibly emotional Watzke thanked Klopp for his service.
“We had a very special relationship, one of trust and friendship. So for us this is very hard,” Watzke said. “After seven years of wonderful work, the thanks of every Borussen [club supporter], the eternal thanks of every Borussen, is there. The only thing that comforts me at this time is that our friendship will remain.”
After the difficulties of the season, Klopp said he simply felt the time came for him to move on.
“This club deserves to be coached by the 100 per cent correct coach and from that point of view I have to come to this decision,” Klopp said. “There’s a stage at which you start planning for the future, and if you’re not 100 per cent certain that you can be there next season, then you can’t plan for it. There was no falling out between me and the team and there won’t be one either.”
Looking back, Klopp said he was proud of what the team had achieved.
“We were able to create a wonderful piece of history,” Klopp said. “It’s very unusual for a story to last seven years in football.”
KLOPP’S PREMIER LEAGUE CREDENTIALS
German coach Jurgen Klopp is expected to leave Borussia Dortmund at the end of the season.
Here, Press Association Sport takes a look at some of the reasons why the Barclays Premier League would welcome the charismatic 47-year-old with open arms.
Klopp twice took Dortmund to the Bundesliga title and also the 2013 Champions League final at Wembley. His teams have always played an attractive blend of high-tempo, passing football - which proved too much for Arsenal in a couple of their recent European ties.
Like several other younger Premier League managers, Klopp wears his heart on his sleeve - and in 2013 the German was handed a touchline ban by UEFA after angrily confronting the fourth official during a Champions League tie against Napoli.
With a rock-star swagger, trendy glasses and designer stubble, Klopp has already won plenty of friends in the English media following their Champions League successes. His jokes, though, might still need a bit of work, having quipped how “everything has an end, except for a sausage which has two”, then bursting out laughing when answering a question on Dortmund’s injuries and indifferent form ahead of this season’s Champions League match at Arsenal.
Working on a budget
Klopp has produced a winning formula at Dortmund without breaking the bank, masterminding the development of stars like Robert Lewandowski and Mario Gotze ahead of big-money moves to Bayern Munich. Defender Mats Hummels and midfielder Marco Reus are two others expected to start a summer auction.
Despite having plenty of suitors since proving himself at Dortmund following his appointment in 2007, the former Mainz manager has remained committed to Signal Iduna Park. It was this staunch dedication that saw him lift Die Schwarzgelben from the doldrums and create one of the most formidable squads in Europe.