McGahn reportedly refused to participate in the pardoning process, causing Trump to consider bringing on a new lawyer, Vanity Fair reported on Monday. McGahn reportedly threatened to leave the administration publicly when Trump considered firing Mueller in June 2017.
News of McGahn's impending departure comes less than two weeks after the New York Times revealed that he's "cooperated extensively" with Robert Mueller's probe into Russian election interference.
Before joining Trump's administration, McGahn served as counsel to Trump's presidential campaign.
ABC News' Tara Palmeri and Katherine Faulders contributed reporting to this article.
After the news of McGahn's conversations with Mueller went public, Trump tweeted that McGahn was not a "RAT" like John Dean in the Watergate scandal.
Trump says Google is 'rigged' with bad news about him
He added that "96 per cent of results on "Trump News" are from National Left-Wing Media", calling the trend "very dangerous". In Google's defence, negative Trump news appears no matter whether one searches Yandex, Bing, or DuckDuckGo.
"He was surprised", this person said. Trump tweeted Wednesday morning.
McGahn, a top election lawyer who served as general counsel on Trump's campaign, has played a pivotal role in the president's remaking of the federal judiciary with young, conservative judges.
Trump, who has repeatedly called the probe a "rigged witch hunt", said he had authorised his team to "fully cooperate" with investigators and provided hundreds of thousands of pages of documents. While Senate Republican leader Mitch McConnell praised McGahn as "the most impressive White House Counsel during my time in Washington".
Mueller's team is looking into whether Trump obstructed justice in trying to end the investigation. Sessions eventually did recuse himself, giving his deputy, Rod Rosenstein, the ultimate authority to appoint a special counsel.
Trump suffered a one-two punch in court this month, when his longtime personal lawyer Michael Cohen pleaded guilty to campaign finance violations and former campaign manager Paul Manafort was found guilty of tax and bank fraud.
McGahn, who counts deep ties within Washington's legal community, has long functioned as Trump's liaison to Justice officials and Congress.