Scott, 35, joined City in 2013 from Everton and has made 194 appearances for the club across all competitions.
The midfielder has had loan spells in recent years with Everton (2020-21) and Aston Villa (2021-22) in a bid to get more game time ahead of this summer's European Championship.
She has been named in the provisional England squad announced by Sarina Wiegman on Tuesday.
"In a way, I never thought I'd be here saying goodbye to Manchester City, but all good things come to an end eventually and I've had so many amazing memories along the way," Scott said in a statement.
"I've had some great opportunities over the last couple of seasons too with my loan spells, but I've always missed everyone here and that will definitely be the case again this summer.
"It's been a real journey over the last eight or so years -- I remember sitting down and hearing the plans of what the club were going to do, and I was so excited to be a part of that.
"Looking back at what we've achieved in that time in terms of trophies and generally as a team, I can't really believe it. I'm forever grateful that I've been surrounded by such talented players and coaching staff who have enabled me to develop and grow as a player."
During her time with City, Scott won the Continental Cup four times, three FA Cups and one Women's Super League title.
"Playing 194 games for one club is an incredible achievement, and Jill has played a crucial part in so many of the team's successes over the years alongside making such a difference to the game as a whole," City coach Gareth Taylor said.
"Her dedication and commitment to this club both on and off the pitch is testament to her character and she leaves Manchester City with legend status and the gratitude of everybody here for her contributions."