"My party has quit the NDA and we will join the Grand Alliance. HAM(S) has parted ways with the NDA," Mr Manjhi said.
RJD chief Lalu Prasad's wife Rabri Devi said Mr Manjhi was feeling suffocated in the BJP-led NDA and that her party would welcome him in the Grand Alliance. "We will give him the honour and respect he deserves," she said, news agency IANS reported.
Mr Manjhi left Janata Dal (United) in 2015 and formed HAM(S) the same year; he then forged an alliance with the NDA before the Bihar assembly elections in 2015.
The Grand Alliance in Bihar now comprises Rashtriya Janata Dal (RJD), Congress and HAM(S). It also has a strong backing of the Janata Dal (United) faction led by Sharad Yadav.
Earlier in the day, Mr Manjhi had said he and former Deputy Chief Minister and RJD leader Tejashwi Yadav would formally announce the move to join the Grand Alliance at a joint press meet in Patna.
Tejashwi Yadav, who is Leader of Opposition in the Bihar assembly, along with his elder brother and former Health Minister Tej Pratap Yadav had met with Mr Manjhi on Wednesday morning.
In July last year, JD(U) chief Nitish Kumar had ended his two-year-long political experiment that was branded as a game-changing Mahagathbandhan.
Mr Kumar later told reporters that he knew "from the very beginning" that his alliance with Lalu Yadav's RJD "would not last for more than a year-and-a-half", but he did his best to carry on in the Grand Alliance, which ultimately disintegrated.
With inputs from IANS