Al Ahly said they had agreed to let the coach end his contract, which runs until 2010, early after Jose reached a deal to lead Angola's national team.
"Jose told... Al Ahly sometime ago that he might not be able to continue his contract and he was mulling another job," said a statement on the official website.
"Jose asked the football committee to discuss the situation but he informed the committee of his decision today," it added.
Jose, nicknamed "the Magician" at Cairo-based Al Ahly, coached the team in 2001-2002 and led them to the African Champions League title, only to be sacked for failing to win the national championship.
He returned to Al Ahly in December 2003, winning four consecutive Egyptian league titles and three African Champions League titles in four years.
The 63-year-old is expected to take charge of the side in June and his contract will run until the end of next January's tournament. He departs Al Ahli after their surprise early elimination from this year's African Champions League.
Angola have been through two coaches in the last six months after failing to qualify for the last phase of Africa's qualifiers for the 2010 World Cup. They were surprise qualifiers for the 2006 finals in Germany.
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