Jose Mourinho will leave Real Madrid at the end of the season after the club and the coach agreed to his departure by mutual consent, the club's president Florentino Perez has announced.
Mourinho will take charge of Real Madrid's final matches of the Primera Division season, away to Real Sociedad on May 26 and at home to Osasuna on June 2, after which he will depart the club.
Perez declared that Mourinho had come to an agreement with the club to rescind his contract.
"The club and the manager agree that the timing is right to bring our relationship to an end," Perez said at a press conference this evening.
"On behalf of the directors, I would like to thank Jose Mourinho for his hard work over the last three years."
Perez also announced that Real Madrid's presidential election will take place the day after Mourinho leaves the club, on Monday June 3.
It is expected that he will be unopposed in the election, with no candidates having put themselves forward two weeks before the election is due to take place.
Perez added that the club had not come to any agreement, or signed any pre-contract with a coach, declaring they would begin searching for Mourinho's successor in the coming days.
Paris Saint-Germain coach Carlo Ancelotti has been touted as the front runner and admitted on Sunday that he had met with his current club's president Nasser Al Khelaifi and director of football Leonardo to inform them of his desire to leave the Ligue 1 champions and join Madrid.
Al Khelaifi confirmed that but reiterated that the club wanted the Italian to see out his contract, which expires in 2014.
Perez also declared that Mourinho would not receive any compensation for leaving the club, therefore forgoing the 20million-euro clause in the coach's contract in the event he was sacked.
Perez said: "No-one has been sacked, no-one has quit, it was a mutual agreement."
"It's not an ideal situation that he is leaving, but after three years we both agree that it was the right time to end this relationship.
"He believes that the best thing is if he leaves the club, and I share his reasons. It's the right decision to start a new project.
"Mourinho has already said he will not receive any compensation, and I reiterate that."
The president paid a fond farewell to Mourinho, who led the club to the Champions League semi-finals three years running and also brought them the 2011-12 Primera Division title.
"It is a sad day, but I wish Mourinho the best," he said. "This club will always remember him, he forms part of our history.
"Each coach has his own personality but you cannot doubt his competitive attitude. Has he made mistakes on the odd occasion? Of course, but the level of pressure at this club is not normal."
"The board of directors wants to thank the work of Jose Mourinho, who has given us a lift on a sporting and competitive level."
Asked about the likelihood of Ancelotti replacing Mourinho, Perez said: "A few days ago the president of PSG spoke to one of our directors about the possibility of Carlo Ancelotti leaving the club to join Madrid.
"They told us it was not possible and we respect that."