Borussia Monchengladbach manager Marco Rose had told the club he will leave in the summer to take over at Bundesliga rivals Borussia Dortmund.
Gladbach said Rose, 44, has “opted” to leave with a year left on his contract.
Max Eberl, Gladbach’s sporting director, said the decision “sadly” came after “weeks” of discussion.
Dortmund, who are yet make an announcement, are searching for a permanent replacement for Lucien Favre.
Leipzig-born Rose has long been among the favourites to succeed interim coach Edin Terzic at Westfalenstadion.
He joined Gladbach from Austrian side Red Bull Salzburg in July 2019 and led them to a top-four Bundesliga finish in his first campaign before guiding them to the knockout stages of the Champions League this season for the first time in their history.
After 21 games this term, Rose’s side are seventh in the table, equal on points with Dortmund who are sixth, and six points adrift of the top four.
Despite Rose’s plan to leave, Eberl said Gladbach “will give everything to reach our goals this season together”.