Mowbray, who took charge at St Andrew’s in January, temporarily stepped away from the club in February before formally taking a leave of absence in March having undergone surgery with a view to returning for pre-season.
The 60-year-old’s assistant and fellow Blues legend Mark Venus initially took charge before Gary Rowett was appointed interim-boss. Birmingham were relegated to League One on the final day of the season.
Mowbray, a former Town captain and coach, has now decided to focus on his recovery and spending time with his family and has left the club with immediate effect.
“As people will be aware, I am currently undertaking a period of extended convalescence following significant and unexpected surgery earlier in the year which required that I take a period of medical absence,” he told the Midlanders’ official website.
“Throughout this period, I have watched every Birmingham City game along with every training session, whilst I have remained in positive and constructive dialogue with [owner and chairman of the board] Tom Wagner, [chief executive officer] Garry Cook and [technical director] Craig Gardner.
“Over the very recent days, it has become apparent to me that I will not be fully fit to resume my duties as manager of Birmingham City in the timescale that would allow the club to best prepare for the forthcoming season and therefore I have regrettably decided to step away from my role at this time.
“Once I have fully recovered, it is important to me that I then spend some quality time with my wife and my boys before I fully commit to work.
“I am extremely grateful to Tom Wagner for the genuine warmth that he has shown towards me during what has been a challenging time, not only for me personally but also for the club.
“I firmly believe that under Tom’s stewardship coupled with the football expertise that Garry offers, Birmingham City have a very bright future ahead.
“I would like to thank everybody associated with the club who has supported me during these unprecedented times and I would like to especially thank the Birmingham City supporters for your affection, your kindness, and your support in the relatively short period of time I have been with the club.
“Whilst I step down as manager of Birmingham City, I now become a Blues fan and I wish everybody at the club nothing but absolute success in the future.
“Once I have fully recovered and have spent some quality time with my family, I intend to make a return to football management at the appropriate moment. I hope that the privacy of my family and I will be respected at this time. Thank you for your ongoing support, Tony.”
Wagner said: “We are disappointed that Tony will not be coming back to lead the team forward but respect his decision to put his health and his family first.
“In a short period of time at Blues Tony demonstrated excellent leadership skills and a work ethic that galvanised all around him.
“He is an outstanding human being and will always be welcome at St. Andrew’s @ Knighthead Park.”
Cook added: “We have been looking forward to Tony returning to the club and to continue the great work that he started earlier this year. Unfortunately, it is not to be.
“Preparation for the new season has already begun and Tony told us that, based on his treatment and recovery programme, he would not be able to do the job that is required before the new season begins.
“I would personally like to commend Tony for informing us of his decision so soon after the end of the season. It provides us the opportunity to undertake a rigorous search process to identify the right leader to take our club forward and have that person in place before the start of pre-season.
“On behalf of everyone at the club, and our supporters, I would wish Tony a full and speedy recovery.
Wishing Mogga a full recovery
