The announcement from Collomb, a political heavyweight and one of Macron's most loyal ministers, comes after popular environment minister Nicolas Hulot quit last month and as the president's approval ratings have plummeted.
Collomb told news magazine L'Express that he will stand for mayor of Lyon in eastern France in 2020, resigning as interior minister after next year's European elections to start campaigning.
"The local elections are still far away -- I will run in Lyon if I don't get diagnosed as seriously ill any time before that," he joked.
"I won't be interior minister right up until the last moment. After a certain amount of time it would be better to be totally free for the campaign," he said.
"I think ministers who want to run in the 2020 local elections should be able to quit the government after the European fight," he said of the May 2019 European Parliament polls.
Collomb, 71, previously served as Lyon mayor for 16 years until Macron poached him for the interior ministry.
The news comes after Macron struggled through a major scandal this summer over revelations that his former bodyguard Alexandre Benalla was filmed roughing up protesters while wearing a police helmet.
Elected in May 2017 on a promise to reinvigorate the French economy, pro-business policies such as tax cuts for the wealthy have yet to bear much fruit, with growth forecasts cut to 1.6 percent this year.
The 40-year-old president, a former investment banker, also became embroiled last weekend in the latest of a series of comments criticised as appearing out of touch with ordinary people.
Macron told a young aspiring gardener he could find him a job just by "crossing the street", in a restaurant or hotel.
A Kantar Sofres Onepoint poll released Monday found only 19 percent had a positive view of Macron, with 60 percent expressing a negative opinion.