Rumours have recently linked Rooney with a move back to his childhood club Everton, with China also touted as an option.
But either way, Neville believes the 32-year old must look elsewhere if he wants his first team career to continue.
"You hope (he doesn't leave) but the way the season's gone, particularly since Christmas, he's not been involved as much as he'd probably have liked," Neville told Sky Sports.
"It looks like he's on his way out of Manchester United and it happens towards the end of your time. You get the signs that now is the time to leave, and probably now is the time.
"If he wants to continue playing at the highest level - week in, week out - and be the first name on the team sheet, then he'll probably have to go and play his football elsewhere."