Shepherd has played the cousin of Alfie Moon (Shane Richie) on the Walford soap for three years, and will bow out in a "nailbiting plot twist", according to The Mirror.
"I feel now is the time to move on," the actor explained. "I have relished every minute of exploring his character - the good and the bad.
"I feel extremely privileged to have had this amazing experience and want to thank everybody - most importantly the fans of the show - for taking Michael and his numerous flaws into their hearts."
EastEnders producer Lorraine Newman added: "The audience will enjoy the dramatic end. With the return of Janine (Charlie Brooks) this month, expect plenty of fireworks."
Former This Life star Shepherd made his debut in the BBC soap in October 2010 under previous executive producer Bryan Kirkwood.
A source told the paper: "It's the end for Michael. He has been an immensely popular character and everyone will be sad to see him go."
Janine Butcher actress Brooks returned to filming in February after six months away from the show.
EastEnders continues tonight (March 13) at 8pm on BBC One.
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