Holtby to leave Schalke at end of season
However sports director Horst Heldt said Holtby, who has an English father and who had been linked with a move to the English Premier League, would not leave during the winter transfer window when the club would receive a transfer fee.
His current deal runs out in June.
"We had wished that Lewis could see a future here beyond this season. But we respect his decision," he said in a club statement.
"We are certain that he will give everything for the club's sporting success up until the last match day of the season."
The 22-year-old, who has won three caps for Germany, joined Schalke in 2009 and has had loan spells at VfL Bochum and Mainz 05 until 2011.