Sellers was previously placed on administrative leave pending an internal investigation.
"After thoroughly investigating, the city found no unlawful harassment or discrimination. However, considering all factors both internally and externally, Sellers has decided to resign," according to the press release.
Sellers was appointed the city manager in early 2015 after serving as the city manager for Kilgore for three years. He also worked on a variety of large projects during his time as Kyle city manager, including the incentive deal that secured Costco, contributing to the Pie Capital brand and more, according to the release.
Assistant City Manager Jerry Hendrix has been acting city manager since July, where he will remain for the time being.
Mayor Travis Mitchell declined to comment on the investigation but did comment on the future of the city.
"Mr. Sellers has played an important role in Kyle for many years, and I wish him the best as he moves forward," Mitchell told Community Impact Newspaper. "Our council and executive team are ready to begin the process of recruiting a new city manager who can build upon the city's strong momentum."