Arnold, who took over the role at the start of the 2017/18 season, is stepping away from the club for personal reasons.
He has overseen four seasons after initially signing as a player/head coach.
‘Arnie’ led Hoppers to promotion as champions from the Northern Premier League during his first season in charge and then delivered a credible seventh-place finish the following season in National Two North.
The disappointment of an injury-riddled relegation season affected by the Covid pandemic was a set Hoppers are on course for a return to National Two and sit in second place in the Northern Premier Division with four games to play.
Arnold also ended his distinguished playing career during his time at Lightfoot Green.
In a stellar playing career he played 450 senior games across a number of clubs as well as gaining representative honours with Lancashire, England Counties and the Barbarians.
He said “This has been a very tough decision for me but also a very easy one too.
"It will be tough to leave Hoppers and the group but my family’s needs are increasing and the time has come for rugby to take a back seat after 20-plus years of playing and coaching. I need to be at home more so the time commitment and travelling have become issues for me.
“Those who know me and my family will be aware that my son Kobi has additional care needs and as a family we’ve been making changes to ensure we can give Kobi the best possible lifestyle.
“I’m determined to finish the season strongly. We have lots to play for between now and the end of the season and there will be no let-up in our approach. I want to go out on a high and pass on a strong base for my replacement to build on.”
Hoppers’ director of rugby Gareth Dyer said: “We are sad to be losing Paul at the end of the season.
"He has been a huge part of the club over the last five years and his energy and positive mindset have driven the club forward in many ways. We totally understand his reasons for doing so and wish him, Emma and the kids all the very best. They will always be part of the Hoppers family.”
The club will be looking for a new team of senior coaches and assistant coach Byron McGuigan has also left the club.
Dyer said “We wish Byron well in the future. He made a positive impact on the club during his time with us. Byron has a number of opportunities available to him and after looking at the whole situation, those would appear be a better fit for him going forward.: