Mancini resolves Inter contract
Inter said in a statement on Saturday that a deal had been mutually agreed after over a year of talks.
Mancini, who has been linked in the media with Real Madrid given coach Manuel Pellegrini is under pressure, was sacked in May last year despite a third straight league title after losing the confidence of Inter president Massimo Moratti.
The 44-year-old coach threatened to resign during the 2007/08 season only to change his mind later, angering Moratti. He was replaced by Jose Mourinho, who led the current Serie A leaders to the scudetto again last term.
It is common in Italy for clubs to continue paying sacked managers so they can be drafted back in as coach if their successor fails.
Mancini had a deal with Inter until 2012 and media reports say he has agreed to walk away with eight million euros, significantly less than he would have been paid for the remainder of the contract.
"I believe an experience abroad would be very useful, given that I think it's the right moment," Mancini, also linked with Liverpool, told Sky television earlier in the week.