Trump isn't saying immediately who will replace Kelly, a retired Marine general who has served as chief of staff since July 2017.
Speaking with reporters on the South Lawn, Trump said Kelly would be "leaving at the end of the year".
"John Kelly could resign in the coming days", she says, warning West Wing employees are bracing for "a pretty big staff shakeup" if and when he leaves.
Considering all of the wrath and acrimony that's supposedly been going on in Kelly's office as well as Trump's, it seems nearly charitable for the President to call Kelly "a great guy".
Baier noted that Vice President Mike Pence's chief of staff, Nick Ayers, is reportedly the front-runner to replace Kelly. 'I appreciate his service very much'.
One member of Trump's Cabinet told another administration official that Kelly is a great American, after news broke on Friday that Trump was about to oust him.
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In total, 28 people have resigned or been fired from the White House during Mr Trump's administration. Kelly is Trump's second chief of staff. It's not clear if the downturn in his relationship with the president was a direct result of his participation in the investigation - though rumors of tensions between the two have persisted for almost a year.
Kelly, a retired four-star Marine general - a qualification that made him attractive for the job to Mr. Trump - strove to bring some order to a White House with relatively little government experience, and to a president who dislikes numerous routine aspects of governing. He curbed Oval Office access, blocked certain outsiders from being able to call the White House switchboard and had broad authority over staffing.
Most of Mueller's other interviewees were part of the Trump election campaign or presidential transition.
Trouble surrounded Kelly before he began his stint as chief of staff.
Kelly's tenure working for Trump was pocked with controversies, and officials were often amazed at how he managed to survive.
On Friday, a number of news outlets reported that Kelly's exit was imminent. He said some of those eligible for protections under the Deferred Action for Childhood Arrivals were 'lazy.' . He quickly took on a broader range of responsibility than Priebus had, requiring all White House staffers to answer to him.