File photo of World XI manager Carlo Ancelotti (L) and Bayern Munich coach Pep Guardiola (R). [Photo/Agencies]

BERLIN - Pep Guardiola will leave Bayern Munich at the end of the season after the Spaniard decided not to extend his contract at the German champions, who announced on Sunday that multiple Champions League winner Carlo Ancelotti had signed a three-year deal to replace him.

Bayern Chief Executive Karl-Heinz Rummenigge confirmed the much-anticipated change in manager, thanking Guardiola for his work and confirming that a deal for Italian Ancelotti, who has been out of a job since leaving Real Madrid in the close season, had been completed.

"We are thankful to Guardiola for all he gave our club and hope to celebrate more success in the current season," Rummenigge said in a statement.

"I am convinced that Pep and the team will work harder to reach the big sporting aims of the club, especially now that it is clear that Pep will leave."

Bayern had repeatedly said they wanted Guardiola to stay at the club, but his departure had been widely predicted, with media reports saying a move to the Premier League was on the cards.

A number of top English clubs are likely to be eyeing up the 44-year-old, who has consolidated his standing as one of Europe's top coaches since joining Bayern in 2013 after winning a remarkable 14 titles in four years at Barcelona.

The Spaniard, who has yet to comment on his decision to quit the club and has already left Munich for a winter holiday, took over after Bayern's treble-winning season under Jupp Heynckes in 2012-13.

He has maintained their domestic dominance with back-to-back league titles and a German Cup in his first two seasons in charge, while also overhauling the playing squad.

Homegrown talents like club icon Bastian Schweinsteiger and Toni Kroos have left on Guardiola's watch while Spaniards Thiago Alcantara and Xabi Alonso have been among the arrivals.

Bayern, however, have maintained their stranglehold on the Bundesliga, winning titles and breaking records in the process.