Mombaerts' senior assistant and former club captain Patrick Kisnorbo has been appointed City's new head coach, completing his progression through the club's coaching ranks.
The Frenchman departs after 14 months in charge, having led City to second in the A-League -- their highest-ever finishing position -- securing an Asian Champions League qualifying play-off spot in the process.
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"I am sad to leave Melbourne City in these circumstances, but I am so very proud of the players and what the club has achieved during my time here," Mombaerts said in a statement.
"We have reached some incredible milestones, we have implemented an exciting way to play, and we have become a true family, playing together every week for our fans, and I have no doubt that Patrick will continue this work. The team is in safe hands under his leadership.
"I have had a fantastic experience in Melbourne and I will always remember my time here with much fondness, but I have been away from my family for a long time and now I must return to care for them in France."
Mombaerts originally joined City on a three-year deal in June 2019.
Former Socceroos defender Kisnorbo, 39, joined City (then Heart) in 2013 and went on to become club captain before shifting into coaching after his retirement in 2016.
Kisnorbo worked as an assistant to City's youth team, then their W-League team.
He then led the W-League team to the 2018 championship, before becoming the club's A-League assistant coach.
"Erick has taught me so much and I am extremely grateful for the way he has helped both myself and the club to develop over the last 14 months," Kisnorbo said.
"Melbourne City is in my blood now and I am here to work hard, to give my all and to ensure this team continues to be a team that everyone can be proud to be a part of."
Mombaerts' departure means only four of the 11 head coaches who started the 2019-20 season will still be at the helm of their respective clubs at the start of next season -- Steve Corica (Sydney FC), Alen Stajcic (Central Coast Mariners), Mark Rudan (Western United) and Ufuk Talay (Wellington Phoenix).