The 25-year-old came through the City youth system before making over 250 appearances for his boyhood club but is out of contract and has decided to find a fresh challenge.
“It is a sad time to leave but for me, personally, I’ve got to challenge myself,” he told the Express & Echo.
“I feel I need to do that somewhere else. I have been at this club for eight seasons now and I just feel I need a change of scenery and hopefully it will pay off. I’m confident it will.
“It will be a whole new change for me and my family and it is sad to leave this club. It is where I’m from and it is where my family is from and I gave everything to this club. So it is sad to go, but it is also time to go.”
Boss Paul Tisdale says his first summer signing will arrive this week as a replacement for Sercombe.
“There is a signing that we will make in the next two or three days,” Tisdale added. “He is another young, progressive midfield player. Hopefully those players will be as productive as Liam Sercombe has been.”