The 26-year-old started the current campaign as one of the three key Liverpool players with their contracts expiring but the English club extended deals for Mohamed Salah and Virgil van Dijk by two years.
Alexander-Arnold, who will now leave Liverpool with the club getting no transfer fee, wrote on social media: “After 20 years at Liverpool Football Club, now is the time for me to confirm that I will be leaving at the end of the season.
“This is easily the hardest decision I’ve ever made in my life.
“I know many of you have wondered why or been frustrated that I haven’t spoken about this yet, but it was always my intention to keep my full focus on the team’s best interests, which was securing No 20.
“This club has been my whole life – my whole world – for 20 years. From the academy right through until now, the support and love I have felt from everyone inside and outside of the club will stay with me forever. I will forever be in debt to you all.
“But, I have never known anything else and this decision is about experiencing a new challenge, taking myself out of my comfort zone and pushing myself both professionally and personally.
“I’ve given my all every single day I’ve been at this club, and I hope you feel like I’ve given back to you during my time here.
“From the bottom of my heart, I thank everybody – my coaches, my managers, my team-mates, the staff and our incredible supporters – for the last 20 years.
“I’ve been blessed enough to live out my dreams here and I will never, ever take for granted the special moments I’ve been fortunate enough to have lived through with you all. My love for this club will never die.”
In an interview with Liverpool TV, he added: “I’ve got full confidence in the manager and the staff and the club going forward.
“It’s not about me thinking we’re not going to fight for titles or fight for trophies season in, season out because I knew from the first few moments with the manager that he was a winner, he was aiming to go and win things. And you’ve seen that this season with the way that we’ve played.
“So, it was never about not having confidence in that, it just boiled down to what I felt I needed, and that is a change.
“That’s something I need to do on my personal journey as a person, but also as a player and a professional, to go and challenge myself elsewhere. I feel like a challenge in a different environment is something I need to do as a player.”