According to Zimbabwe Independent, Mnangagwa handed in his resignation letter to President Mugabe, 93, last week on Monday, but the nonagenarian rejected it saying the deputy president was "jumping the gun".
Unnamed sources claimed that Grace's recent public outburst against Mnangagwa was one of the reasons that he wanted to resign.
The sources said that Mnangagwa believed there was a plot against him by the system to kicking him out.
"The vice-president gave mainly two reasons for seeking to quit. First, he cited public attacks and humiliation by Grace at the Zanu-PF headquarters on July 27 and the same thing two days later, on July 29, in Chinhoyi. Second, Mnangagwa said he now believes there is a plot against him by the system, given recent developments and allegedly false intelligence reports which on many issues made him think Mugabe wanted him to be his successor," the unnamed sources were quoted as saying.
Grace recently told a ruling party youth rally that she wasn't sure if she and the vice president were still friends.
Speaking mostly in Shona, she also said she’d been approached by unnamed people who wanted to take to the streets to remove Mnangagwa from office.
The First Lady had previously told Zimbabwe's vice presidents - Mnangangwa and Phelekezela Mphoko - at a campaign rally in Chinhoyi that they were serving at her husband's will.
Grace warned the two deputies that they risked losing their jobs if they did not perform to the expectations of her husband.
A few days earlier, the First lady had publicly urged her ageing husband to name his successor.