Neville was due to end his tenure with the Lionesses when his contract expired in July but had hoped to coach Great Britain at the delayed Olympic Games in Tokyo.
The Football Association (FA) on Monday announced that the former Manchester United and England defender has left the role, one which he took on three years ago.
An interim head coach will be appointed to fill in before Netherlands boss Sarina Wiegman takes over following the Olympics in August.
The 43-year-old said in a statement released by the FA: "It has been an honour to manage England and I have enjoyed three of the best years of my career with the FA and the Lionesses.
"The players who wear the England shirt are some of the most talented and dedicated athletes I have ever had the privilege to work with.
"They have challenged me and improved me as a coach, and I am very grateful to them for the fantastic memories we have shared.
"I’d like to thank the FA for the tremendous backing they have given me, in particular Sue Campbell [FA director of women's football],and my talented support staff whose energy, commitment and enthusiasm has been crucial to helping us make the progress we have.
"I wish England Women every success in the future and look forward to following their journey in the years to come."