Kateregga was loaned out to Maritzburg United in the second half of last season from City.
The midfielder has reportedly attracted interest from other PSL clubs after helping the Team of Choice survive relegation last season.
The 25-year-old played in the 2019 Africa Cup of Nations last month before City kick off their pre-season run.
Kateregga was linked with a permanent move to the Team of Choice but he has started training with his former side Kampala Capital City Authority FC in Uganda.
The Mulago born midfielder played 11 games for the Citizens in his first season in the Absa Premiership before he was loaned out.
“Thank you Cape Town City FC for the opportunity. I would never thank you enough. I wish the club the very best for the future,” read a tweet from Kateregga.