Mr. Trump and Ayers have been working out the details for the appointment, senior White House sources said, but the president wants his next chief of staff to hold the position through the 2020 election.
As ABC News has previously reported Kelly was among members of the administration and those outside advisers close to the president who have been interviewed by the special counsel, according to sources over the course of the investigation.
"John Kelly will be leaving toward the end of the year", the president said after walking outside his residence to address reporters gathered on the South Lawn. Kelly was reportedly doing those things for a while after he arrived, at least until Trump rebelled. Trump has taken the unusual step of inviting Ayers to recently accompany him on Air Force One, even without Pence present, the people said.
His iron first also alienated some long-time Trump allies and he grew increasingly isolated, with a greatly diminished role.
Rumors of Kelly's departure had swirled for more than a year amid persistent reports of tensions between Trump and his chief of staff.
Ayers and Kelly both typically join Trump and Pence during their weekly lunch in the dining room outside the Oval Office.
Stephen Bannon - Trump's chief strategist was sacked by Trump in mid-August after clashing with White House moderates.
It isn't immediately clear if Kelly is resigning or being fired.
Reince Priebus - Replaced as chief of staff by John Kelly, Priebus lost Trump's confidence after setbacks in Congress.
Kelly is following other senior aides who have headed for the exits in recent weeks. It's easy to see how the narrative began: Kelly is a four-star general and longtime political operative, as opposed to say, Omarosa, Jared Kushner, or the rest of Trump's rogue gallery of inexperienced feckless sycophants. "But John Kelly will be leaving towards the end of the year, at the end of the year".
Among White House officials, however, there is broad consensus that his days as chief of staff are numbered.
"I appreciate his service very much", Trump said.
But Kelly's tenure was hardly smooth sailing.
On Friday, Trump announced his choice of William Barr, who was attorney general under former President George H.W. Bush in the 1990s, to return to the job as the head of the Justice Department. Along the way, he has drawn a number of detractors who have found him focused more on promoting himself than on tackling the job at hand. Kelly's shifting accounts caused his credibility inside the West Wing to plummet, and it never truly recovered, according to officials.