Striker Hughes joined the Gladiators in 2020 and last season captained them to a fourth-place finish in the NPL Premier Division, scoring 12 goals.
Matlock boss Paul Phillips says his skipper will be missed by all at the club.
He said: “We are really sorry to see Liam, and also his wonderful family who supported him and us all season, depart.
“He will be sorely missed as a leader and a great person on and off the pitch. We wish him and his family nothing but the best going forward and they will always be welcome back with open arms.”
Hughes paid tribute to Phillips and all at Matlock on social media.
He said: “[Matlock are] the club that brought my love back to the game. A tough decision but one I had to make for my family. Thank you to everyone associated with
"Your support and kind words mean the world to me and I wish you nothing but success in the future.
"As a group, although we didn’t get over the line, what we achieved this year will stay with me and it has been a pleasure leading this group of lads out this season. I want to say a big thank you to the fans for your support. You truly are all first class.
"I want to personally say a big thank you to Paul Phillips – what you have done for me and my family has been first class and I will always be grateful. A true leader and man of the game."
Defender Ryan Qualter has been handed the captaincy following Hughes’ exit.