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The club legend has called time on his second spell in charge of the Spanish giants, after a season which saw no trophies for the first time in 11 years.
Real finished second in LaLiga behind city rivals Atletico, while they exited the Champions League to finalists Chelsea and were dumped out of the Copa del Rey in the round of 32.
The future of Zidane - who led Real to three consecutive European Cup triumphs during his first stint as Real coach - had been the subject of much speculation in recent weeks, with the World Cup winner known to have a fractious, if ultimately successful, relationship with the club's hierarchy.
With Antonio Conte stepping down as Inter Milan coach on Wednesday, the former Chelsea and Juventus coach will now be one of the favourites to take over at the Bernabeu.