The Egypt international joined the club in January from champions Borussia Dortmund, but an option to extend his contract until 2014 has not been taken by Mainz, who have instead proposed a rolling one-year deal.
Zidan, who has scored 29 goals in 45 appearances spanning three different spells for the club, has turned that down and is now set to leave the club this summer.
"Mohamed Zidan has rejected (the contract) and we are not going to negotiate any further," said Mainz's general manager Christian Heidel.
"The plan did work out in that he made a huge contribution towards us avoiding relegation.
"We have had three fantastic short spells with Zidan, but now it all came down to a long-term collaboration.
"Money was never an issue, it was purely the length of the contract."
The 30-year-old will now become a free agent at the end of June, unless he changes his mind and accepts Mainz's one-year contract offer.