The 66-year-old had left the Al-Ahly in February following the Port Said tragedy in which at least 74 people were killed, but returned two weeks later due to his good relationship with the club.
However, Jose thinks that the situation in the country is still problematic and does not think that the necessary conditions for him to remain are present.
"This is my last game with Al-Ahly," he told reporters after the club's 2-0 friendly defeat against Espanyol. "I am very sad to leave.
"The situation is very difficult in Egypt. No one cares about football. Everyone is talking about politics.
"Even the players are no longer focused on football because of politics and the atmosphere around them.
"These conditions do not help me produce my best [work], so I decided to leave rather than fail to achieve what the club's fans wish for.
"I repeat that I am very sad to leave. I wanted to end my coaching career with Al-Ahly and I cannot repay the fans for what they have given me throughout eight years."Jose has led Al-Ahly to six Egyptian Premier League titles and four CAF Champions League crowns since he arrived at the club.