Milicic will return to the area he grew up in, to work alongside western Sydney's head coach Tony Popovic.

Milicic leaves Heart after narrowly missing out on the club's coaching position, which went to former Socceroo John Aloisi.

Melbourne Heart chief executive officer Scott Munn thanked Milicic for his contribution in the club's first two seasons.

"Ante had a substantial role in the establishment of our playing roster and implementation of the playing style and philosophy which is now our trademark," Munn said.

"While obviously disappointed to see Ante leave, we understand the significance of the opportunity which presented itself in helping establish a team in his home town."

Milicic was a part of former Heart coach John van 't Schip's inaugural coaching panel.