The 65-year-old told the Lions on Thursday he would not return for an 11th season at the helm, despite having a year to run on his contract.
In the lead up to Brisbane's seven-point grand final victory over Fremantle, Fagan admitted he was considering his future over concerns he didn't have the required energy to remain senior coach.
"I'm comfortable that now is the right time for Ursula and I to return to Melbourne to be closer to our family," Fagan said in a club statement.Â
"Telling the players and football staff today was one of the hardest things I've done in my life.
"Together, we have been on a mission to make the Lions the most entertaining and competitive team in the competition, and we have done that.
"I was grateful to be given the role to coach the club, and it has been an incredible ride."
Fagan described the job as all-encompassing and suggested now was the right time to go as the club had never been in greater shape.
"The boys will continue to contend, and I'll be their number one fan, but a fresh face at the helm will be a key pillar for the players to come back to next season, as they work hard to achieve more success," Fagan said.
"I'll miss the club and it will feel strange not to be involved but for the last ten years I've thought about nothing other than how we can improve, get better and be successful.
"To see the club develop onfield from cellar dwellers to three-time premiers has been amazing."
Fagan, who never played the game at the top level, arrived at Brisbane in 2016 and won just 10 games in his first two seasons.
He then proceeded to shepherd the club to eight straight finals berths and four consecutive grand final appearances.
The Lions had 148 wins, 93 losses and two draws across his 243-game tenure, leaving Fagan with a better record than fellow Lions three-peat coach Leigh Matthews (142 wins, 92 losses, three draws in 237 games).
"Chris arrived at our club with a clear view of what good people, strong relationships and shared belief could achieve," Brisbane chair Andrew Wellington said.
"He led with humility, without ego and with an unwavering commitment to helping those around him become better."
His departure means the Lions must find a new senior coach to lead their quest for a historic four-peat, a feat unseen in the VFL/AFL since Collingwood from 1927-30.
Brisbane football boss Danny Daly, who left a career in banking to join Collingwood in 2000 before stints at North Melbourne and Richmond, has confirmed a desire to become a senior coach.
He has previously knocked back interest from Gold Coast, Collingwood, Essendon, West Coast and Melbourne.
Fagan had talked up backline coach Dale Morris, who suggested the idea of using "Wharfie Time" to motivate the Lions if the Dockers reached for the button in the grand final.
Daly also floated midfield coach Cam Bruce as another possible replacement, while pointing to an increasing trend around the league for clubs to opt for young first-time assistant coaches.
Fagan has indicated he will not suggest a replacement to the club and that he wants to stay in football, in some shape or form.
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