Neuer will not extend Schalke contract
Debt-ridden Schalke will allow Neuer to move in the close season - probably to Bayern Munich who have already asked for a meeting to discuss signing the 25-year-old - so they can claim a transfer fee rather than let him leave for free.
Local media estimate he would cost 20 million euros to buy from Schalke, who have reached the Champions League semi-finals where they face Manchester United but have had a disappointing Bundesliga campaign and are in mid-table.
"I wanted to be honest and explain my decision," a tearful Neuer told reporters at a packed news conference in Gelsenkirchen while fighting back the tears. "I want to develop further and take a new big step in my career."
"I want to continue playing in the Champions League, at the highest level. As a person I want to take a step that will allow me to stand on my own two feet," said Schalke's talisman who will leave the club whose junior team he joined aged five.
Bayern president Uli Hoeness said he hoped Neuer could sign for the Munich club at the end of the season.
"Where there is a will there is a way," he told German broadcaster ZDF. "I think we can do it and if Schalke do not get any transfer fee next year then they will act in such a way so as to get an agreement."
"We hope he will come this year and if not this year then he will come next year."
Schalke sports director Horst Heldt confirmed the Bavarians had asked for a meeting.
"Bayern have asked for a meeting but we said that at this moment this is not possible given the important matches we have coming up. But certainly there will be a meeting and there will be talks at some point," Heldt told reporters.
Neuer is considered one of the best keepers in Europe having helped Germany to a third-place finish at last year's World Cup and Schalke to the Champions League semis for the first time.
He was also reported by the media to be a target of several big European clubs, including Manchester United, whose Dutch keeper Edwin van der Sar will retire at the end of the season.
Bayern have struggled with their goalkeepers since the retirement of Oliver Kahn in 2008 with Michael Rensing replaced by 36-year-old Hans-Joerg Butt, who again won the starting spot late this season from 22-year-old Thomas Kraft.
Bayern president Uli Hoeness, whose public admission that he wished to sign Neuer from arch-rivals Schalke has triggered anger amongst some of the Bavarian fans, said a few days ago he was aware Neuer had already taken a decision.
Neuer's likely departure will probably trigger a merry-go-round of Bundesliga goalkeeper transfers with Schalke almost certainly needing to find a credible replacement.