"I will be very sorry to leave - Leicester has been a great part of my life," said Howard. "But for family and business reasons this will be my last year.
"The club is in really good order, it is really well organised and there are some good things in place.
"The season is not half over yet, and the players have put a really good spirit into the club and I am excited about the rest of the season. We are all focused on that. I still want to win things."
Leicester Tigers chairman Peter Tom said: "We were delighted last year when Pat agreed to stay for another year, but we always knew that it was his intention to return home at the end of this season.
"Pat has done a fantastic job for the club, initially as a player and then as backs coach and head coach. He has brought about a number of changes which have enabled us to move forward and Tigers are now in a very strong position.
"We have identified a number of potential candidates as his replacement and Pat has been involved in that process, which will continue.
"For the moment, though, Pat and the rest of his staff and all of the players are totally focused on the games ahead, with the rest of this hectic spell in the Guinness Premiership programme, two big games to come in our Heineken Cup pool and also a semi-final in the EDF Energy Cup.
"There is no doubt that whether Pat decides to make a career in his business or to stay involved in rugby he will make a tremendous success of whatever he chooses to do.
"On a personal note, I would like to thank him for the contribution he has already made to the Tigers. His decision will provide an even greater incentive for the players to win something to say thank-you to Pat and all of our supporters."
As the focus is totally on the rest of the season, the club and Pat Howard will not be commenting any further on his decision until a successor is appointed.