Richards, 25, has one year left on his current contract but the City full-back has become an frustrated with his lack of opportunities at the club and is willing to leave his boyhood team in search of regular first team football.
City boss Manuel Pellegrini had hoped to keep Richards at the club but the defender made it clear he doesn't want to sit around on the bench anymore.
A source close to Richards revealed the City star made the club aware of his plans to leave at the end of the season back in March.
The source said: "It is with a heavy heart that Micah has told City that he will not be signing his new deal and they have now accepted he will be leaving.
"Micah has grown up at City and given his all but this is the right time to move on."
City will be keen to cash in on Richards while they can instead of allowing him to leave the club on a free next year.
Micah Richards will NOT sign a new contract at Manchester City
Daily Star | Apr 13