Reported Tottenham target Alexander Nubel has told Schalke he will not renew his contract, which is due to expire at the end of the season.
Schalke had been locked in negotiations to keep the club captain at the Veltins-Arena amid rumours Spurs boss Jose Mourinho is keen to bring the 23-year-old to the Premier League.
Nubel, who has been dubbed in some quarters as the new Manuel Neuer, made the switch to Schalke from Paderborn in 2015 but has told the club he is to seek pastures new.
Schalke sports director Jochen Schneider told the club's official website: "Following all the discussions that we have had with Alexander Nubel and his agent in recent months, we aren't surprised by his decision and of course respect it.
"However, we don't need to understand his decision. In recent months, we have clearly shown through words and actions how much of a central role he could have played with us in the future: a role that entails leading a very young team, which has already won over many admirers in the first half of the season, as goalkeeper and as captain.
"I'm convinced that Alex will give everything for the club until the end of the season. From summer 2020, we will continue on our path without him."
Nubel, who has also been touted as a potential successor to Neuer at Bayern Munich, is serving a four-match ban for an ugly kung fu-style challenge on Eintracht Frankfurt midfielder Mijat Gacinovic on December 15.
Schalke are fifth in the Bundesliga at the mid-season break but only seven points adrift of leaders RB Leipzig in a congested table.