The German mass-circulation newspaper Bild first reported the move, which had been rumored for several days. Later, Magath informed Wolfsburg of his intentions and the club confirmed that the 55-year-old coach would be leaving after the season ends on May 23.

Bild said Magath had an early exit clause in his contract allowing him to leave Wolfsburg before it expires in June 2010.

"We have reached our goals for the team substantially faster than we had planned in the summer of 2007 when I took charge," said Magath in a statement released by the club. "This team is young and is bound to develop further in the future."

Magath has steered Wolfsburg to the top of the Bundesliga standings this season, while Schalke are currently in seventh place.

Magath has a four-year contract to be coach and technical director at Schalke. As in Wolfsburg, he will also be a member of the club's board.

Before taking over at Wolfsburg, Magath twice won league and cup doubles with Bayern Munich. He also won the European Cup as a player with Hamburg in 1983.