A highly experienced former defence coach of Australia with whom he spent 10 years, the 50-year-old Sydney born dual-code player and coach arrived in Llanelli in July 2008, with more than 17 years coaching experience in Australia.
Muggleton has not revealed where he will be heading next but will be continuing in rugby coaching and thanked the region for the past two years.
He said: "I have enjoyed my time in Llanelli and it has been great to work within this very passionate rugby region with an amazing heritage. I wish them all the very best going forward."
Scarlets Head Coach Nigel Davies said: "John came here with a lot of experience and has had a significant role in working with a number of our younger players in the squad and developing our team as a whole.
"He was brought here on a fixed term contract for two years to help us shape and develop this new-look squad and has been an important part of our coaching set-up during the past two seasons.
"We are grateful for all the work that he has done for the Scarlets and for his commitment to us and wish him all the best in his future coaching roles."
Following Muggleton's departure next month, the Scarlets will be restructuring their coaching set-up for next season and Nigel Davies is expected to announce his new look coaching team in the next few weeks.