The German has become synonymous with the Reds since his appointment in 2015, succeeding where many others had failed in restoring the club to its former glories.
Klopp won virtually every trophy available to him to join an illustrious list of legendary managers who have occupied the Anfield dugout. The 56-year-old says it is time for a rest, but it is almost inconceivable to think he won't return to elite football management in the future.
Meanwhile, Liverpool are coming to terms with the impending departure of one of the game's leading coaches, and must quickly put in place a succession plan to build upon the German's exceptional work and keep the club on an upwards trajectory.
Here we look at what could be next for Klopp – and the Premier League leaders.
Why is Klopp quitting?
The German explained that while sitting down with the club to formalise plans for the 2024-25 campaign he realised he might no longer have the energy to drive the team forwards and that the feeling even took him by surprise.
“When we sat there together talking about potential signings, the next summer camp and can we go wherever, the thought came up, ‘I am not sure I am here then anymore’ and I was surprised myself by that. I obviously start thinking about it,” revealed Klopp.
He also said the 2022-23 campaign had been extremely taxing for him, personally. Having been in contention for a quadruple the season before, the Reds' standards dropped considerably, ending up without silverware following a fifth-placed Premier League finish, a last-16 exit in the Champions League and fourth round failures in both domestic cups.
And while their summer signings have generally been a success and they sit top of the league, Liverpool still feels like a club in the midst of a rebuild, while key players like Mohamed Salah, Virgil van Dijk and Alisson Becker aren't getting any younger.
What's next for Liverpool?
The name on everyone's lips is former player Xabi Alonso.
A cultured midfielder in his playing days, Alonso remains an enormously popular figure at Anfield and would seem to tick every box.
As Jose Mourinho famously said: "Xabi Alonso was coached by Guardiola at Bayern, myself at Real Madrid, by Ancelotti and by Benitez in Liverpool... He has the conditions to be a very good coach."
And so it is proving, with Alonso having guided Bayer Leverkusen to the top of the Bundesliga. The team cruelly nicknamed 'Neverkusen' enjoy a four-point lead over Bayern Munich at the halfway point of the season – and it's a feat they have achieved playing modern, attractive football.
Alonso has the pedigree and the style while his popularity would afford him time to set about the unenviable task of filling Klopp's shoes.
Aside from Alonso, Brighton boss Roberto De Zerbi, Klopp's assistant Pep Lijnders and the former Bayern coach Julian Nagelsmann are among the early names being discussed.
Club legend Steven Gerrard was at one time well-positioned to succeed Klopp but his stock has fallen following his failure at Aston Villa, while he has just extended his contract with Saudi Pro League Al Ettifaq.
What does this mean for Mohamed Salah and the rest of the Liverpool squad?
The departure of a long-term figurehead quite naturally raises questions about the future of his most trusted players.
Salah was the subject of sustained interest from the Saudi Pro League last summer and Michael Emenalo, the SPL's sporting director, has suggested on several occasions they are likely to rekindle the move in the future.
At a time when the SPL is aggressively growing its brand, who better to recruit than the Arab world's pre-eminent player?
And with his mentor Klopp moving on, the stars could be aligning for Salah to finally become the face of the SPL.
Alongside Salah, captain Van Dijk and goalkeeper Alisson have been pillars of the Klopp era. With both enjoying strong seasons there is no suggestion Klopp's exit could directly affect their immediate futures.
What's next for Klopp?
The obvious answer would be one of the two prestige jobs in his native Germany. Bayern Munich have coveted him for a long time, while it's the long-standing dream of the German FA to appoint him as national team coach.
It's hard to overstate Klopp's immense popularity in Germany and the allure of a high-profile homecoming could prove hard to resist.
The national team has been suffering in recent times, with Nagelsmann installed last September to replace the sacked Hansi Flick and tasked with getting things back on track ahead of hosting Euro 2024.
With Nagelsmann likely to see his long-term future in club management, the post could become available after this summer's tournament.
Bayern, meanwhile, have had their ups and downs under Thomas Tuchel, a coach who has also had clashes with his superiors at the Allianz Arena.
Should his side indeed miss out on the league title to Alonso's Leverkusen, it could create the perfect opening for Klopp.
That said, he won't be short of offers, whether it be from broadcasters, elite clubs or ambitious upstarts from emerging markets like Saudi Arabia.
One thing is for certain, it won't be another club in the Premier League. "No other English club ever. I can promise that. Even if I have nothing to eat," said Klopp.
What has been the reaction?
Former Liverpool defender Jamie Carragher posted on X, formerly Twitter: "This news was always going to be a body blow to the club whenever it came. I just thought it would be another few years away. What a manager, what a man, let’s go out with a bang Jurgen!"
Meanwhile, the former Liverpool midfielder Graeme Souness, said: "I'm amazed, I just think the demands of that job, it's one of the best jobs in the world if you get it right and he has done that. It would appear he has got a team again but it's just the toll it takes on the individual. When I look at Jurgen Klopp he is such a perfect fit for Liverpool cause he is on it, he's at it. He's aggressive, he's emotional and confrontational but that takes a toll. The pressures of being a manager at a big football club are enormous."
Edin Terzic, the Borussia Dortmund manager, said: "Jurgen Klopp is an outstanding person. I was lucky enough to get to know him here. He has shaped our club and Liverpool like no other. I am sure that there will be another station in his coaching life, there will be a place where he will do a similarly good job."
While Thomas Tuchel, the Bayern coach, added: "I have to digest that first, I can't say anything at the moment. Kloppo is one of the very best coaches in the world, he has always managed to influence the clubs where he worked. It's big news."