Sellars spent five months in the dug-out last season alongside Mark Trueman with the pair sacked at the end of the campaign.
Both were offered the prospect of remaining at the club with Trueman named as the club's first-team link coach earlier this month.
But Sellers who first joined the Bantams back in 2014 and has progressed through the academy in various coaching roles, is to depart - although the club will fund his UEFA Pro (Level 5) license coaching course.
He said: “Having joined the club seven years ago, I have learnt an awful lot and progressed through many different roles.
“I have had a fantastic time, and made some great memories, but I felt now was the time for me to try something new and ensure I develop further as much as possible - as an individual.
“It was an extremely tough decision, and one which took me an awful long time to make.
“I would like to thank everyone I have had the pleasure of working with along the way for their support and guidance over the years, and am grateful for the fantastic opportunities I have been presented with.
“My biggest thanks go to the Bradford City supporters who, over the past six months, have been behind both myself and Mark all the way. It is extremely humbling, and hugely appreciated. I will not forget it.
“Managing the first team and representing Bradford City AFC was a huge honour, and one which I look back on with immense pride.
City’s chief executive officer, Ryan Sparks, said: “We are obviously disappointed Conor has decided to step away.
“He is a talented individual, and we hoped he would choose to be a part of our story, though we wish him well with his future in the game."