Blancos president Florentino Perez has confirmed the Portuguese coach is set to end his three-year spell in La Liga following a trophy-less season in the capital
President Florentino Perez revealed at a press conference on Monday that the former Inter, Chelsea and Porto coach's time in charge at the Bernabeu is coming to an end by mutual agreement once the 2012-13 season has reached its conclusion.
“The club and coach believe the time is right to bring our relationship to an end,” said Perez.
“I would like to thank Jose Mourinho for all his hard work over the last three years. The team has improved over his time here and I would like to wish him all the best.
"Everything is relative. From where we have come, we have taken a big step but we were lacking a little extra."
The announcement comes after a disappointing spell saw Madrid knocked out of the Champions League by Borussia Dortmund in the semi-finals and suffer defeat to rivals Atletico Madrid in the Copa del Rey final, while Barcelona marched to the Liga title.
"The achievements of this season have not been sufficient for the demands of a club such as Real Madrid or a coach like Mourinho.
"Every coach has his personality. Has he made mistakes sometimes? Sure. He himself recognises that, but the level of pressure he is under is not normal. There have also been times when he has passed the limits of what is normal.
"The time is right to go our separate ways and once again I would like to thank Jose Mourinho for all his hard work."
Perez admitted the subject of Mourinho's future has been on the club's agenda for some time, but insisted a final decision has only been reached now.
"We have come to this decision just now, although its something that has been at the back of our mind for some time.
"We have no pre-contract signed with any manager. This is something we have to look at over the coming days."
Once the league season has reached its end, the outgoing Mourinho is expected to return to England in the summer and take over at former club Chelsea, although the likes of Paris Saint-Germain, Monaco and Manchester City are outside contenders for his signature.