Model reduction is the construction of simple yet predictive descriptions of the dynamics of many-body systems in terms of a few relevant variables. A prerequisite to model reduction is the identification of these relevant variables, a task for which no general method exists. Here, we develop a systematic approach based on the information bottleneck to identify the relevant variables, defined as those most predictive of the future. We elucidate analytically the relation between these relevant variables and the eigenfunctions of the transfer operator describing the dynamics. Further, we show that in the limit of high compression, the relevant variables are directly determined by the slowest-decaying eigenfunctions. Our information-based approach indicates when to optimally stop increasing the complexity of the reduced model. Furthermore, it provides a firm foundation to construct interpretable deep learning tools that perform model reduction. We illustrate how these tools work in practice by considering uncurated videos of atmospheric flows from which our algorithms automatically extract the dominant slow collective variables, as well as experimental videos of cyanobacteria colonies in which we discover an emergent synchronization order parameter.