Ballack has been at Stamford Bridge since 2006, but the London club were unwilling to offer the German the two-year contract he was reportedly seeking.
"Chelsea was always my first choice as I had four great years at the club and enjoyed every minute, but it was not to be. It's still my first choice, even now, but it was not up to me. The decision was down to Roman," Ballack said.
"It's unfortunate we couldn't come together, but I have to put it behind me. I've known for a while that the negotiations had stopped and it's time to move on. I have to find a new club and carry on with my career."