Moving to Manchester in June 2020, Lillo played an important role behind the scenes as City lifted two Premier League titles and a League Cup.
Lillo said of his departure: “My time at Manchester City has been one of the most enjoyable periods of my career.
“To work alongside Pep, his backroom staff and this group of players has been a pleasure and I hope to have contributed in a small way to the fantastic success we have enjoyed on the pitch.
“I wish the club the very best and hope they can achieve all of their ambitions moving forwards.”
Txiki Begiristain added: “Juanma has been an integral part of a team that has won back-to-back Premier League titles.
“His dedication, passion and desire to improve our squad have been evident from our results on the pitch throughout his time at the club.
“It has been a pleasure working with Juanma over the last two seasons and everybody at Manchester City wishes him well in his new venture.”