Zidane, who won the World Cup with France in 1998 as a player, told media at a hastily arranged press conference in Madrid: “The team needs to keep winning so it needs a change to keep winning.”
“The team needs another way, another method of working, that's why I'm going,” he said.
Zidane's Real Madrid team beat Liverpool in the final of the Champions League on Saturday, the third consecutive season the Spanish giants have been crowned champions of Europe under his leadership.
There had been speculation Zidane would have stepped down if his team had lost the final but after securing victory the football world presumed he would stay on.
But the Frenchman, who was a former player at Real Madrid, has surprised everyone including Real's president Florentino Perez who said he was upset by Zidane's “unexpected” decision.
— MARCA (@marca) May 31, 2018
Perez said: “It is a totally unexpected decision, today is a sad day.”
“I told him that Real Madrid will always be his home and he will always be welcome,” said Perez adding that he had not tried to change Zidane's mind.
Speculation will now turn to what Zidane does next.
Many believe he will end up as the coach of France's national team. He could replace the current national team manager Didier Deschamps if he decides to step down after the World Cup.
Zidane however said he wouldn't be taking up a new post immediately.
“I am not looking for another team,” he said.
But a few teams might come looking for him given his record of winning three Champions League titles on the bounce.