He was offered a contract extension but the move means he can spend more time with his wife Tracey and children Katie, Hayley and Ryan. The 39-year-old had signalled as early as December 2013 that the World Cup would be a logical point to reassess his future.
"The offer came out of the blue, it was something I wasn't expecting. I weighed everything up and it was an offer I had to take," he told NewstalkZB. "It's sad in one sense to be leaving a great group of guys, but as a family we're rapt.
"It can be pretty draining and tough on families at home [for people in this industry] when you have to up and leave from particular roles and move countries or cities every year. This way I get to spend a lot more time based at home in Christchurch. It's a chance that was too good to turn down."
Bond said New Zealand coach Mike Hesson had been "ultra-supportive of the move" because he understood the impact being away from home could have. "When you're away 200-250 days a year, it's certainly demanding. That's not to say I don't love the role but now I've got a gig where I can still do the job I love and get that time at home.
"I'm still hoping to have some role helping bowlers out in New Zealand."
Mumbai will be coached by former Australian captain Ricky Ponting this season, which is expected to start in April. Bond is the bowling coach and former South African player Jonty Rhodes is the fielding coach.
Bond played one season of IPL cricket in 2010 with the Kolkata Knight Riders.
His departure comes as a blow, given the success the New Zealand pace attack has enjoyed under his tutelage.
NZC's head of cricket Lindsay Crocker said his organisation had been anxious to retain Bond's services.
"Make no bones about this - we're very disappointed to be losing Shane," he said.
Bond joins Allan Donald and Damien Wright in exiting the New Zealand bowling coach role since the 2011 World Cup.
