The 44-year-old Australian left London Broncos to join Cas in November 2005.
And, although they were relegated in his first season, he has fashioned his team into genuine play-off contenders over the last three seasons.
"I've had a fantastic time at Cas and I'm proud of the growth the club has experienced in my time. But I think it's time to move on," said Matterson.
"I've overseen the development of some outstanding juniors and I'm content at leaving the club in good shape."
Matterson, the second longest-serving coach in Super League, is expected to return to Australia when he quits Castleford with a view to joining the staff of an NRL club.
Ironically, Super League's longest-serving coach Justin Morgan, who has been with Hull KR since August 2005, has already been linked with the forthcoming vacancy.
Former Bradford, Wigan and Great Britain coach Brian Noble, currently on the coaching team at Halifax, is another name in the frame.
But what sort of an inheritance Matterson's successor can expect depends on how this season's early leaders Cas turn things round over the final two months of the campaign.
Having made the play-offs in 2009, Cas missed out to Crusaders on the final day last season but are still handily placed this year, lying seventh despite a run of just two wins in 12 Super League matches.
And, although their next league game is a daunting one, at champions Wigan on Wednesday night, Cas are still in the Challenge Cup, with a home quarter-final against Huddersfield to look forward to on 23 July.
"Our aims are to secure a home play-off draw and to make the Wembley cup final," said Castleford chief executive Richard Wright.
"Terry has brought a level of professionalism to the club that is required at this level. He has guided us to become a competitive force in Super League.
"We remain are in a position to meet those aims and we will be fully focused on doing so."
http://news.bbc.co.uk/sport1/hi/rugby_l ... 018837.stmTerry Matterson has brought a level of professionalism to the club that is required at this level. He has guided us to become a competitive force in Super League
Richard Wright
Castleford chief executive
