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Ralph Hasenhuttl has been linked with a move to take over the position of Arsene Wenger who quit after 22 years in charge of the Gunners.
Report claim Hasenhuttl has left his position as manager of RB Leipzig after failing to agree a new long-term contract.
The Austrian coach, who is reported target for the Arsenal job, took charge of Leipzig in 2016 and led the club into the Champions League for the first time.
This season he kept the club in Europe once again by securing a sixth place finish in the Bundesliga.
But he has decided to leave the side with 12 months remaining on his contract despite being keen to extend his current deal.
“The club are well within their rights not to offer me an extension,” Hasenhuttl said.
“But we also stressed that going into the final year of a contract without a clear long-term future plan wasn’t ideal.
“I thought it was important for the future of the club and I would have liked to have been given a reassuring yes rather than a resounding no.
“That’s why I asked for my contract to be terminated early. I’d like to thank everyone at the club for an unforgettable time.”
Leipzig sporting director Ralf Rangnick added: ”I would have really liked to continue into the next season with Ralph Hasenhuttl as head coach.
“From the bottom of my heart, I wish him all the best for the future, both professionally and privately.”
According to the Sun, Hasenhuttl was one of the names on Arsenal’s shortlist to replace Arsene Wenger at the Emirates.