Dwight Yorke stepped down as Macarthur FC head coach after barely six months in charge as the former Manchester United striker was linked with another A-League post.
Yorke, 51, has been suggested as the man to take over from Steve Corica as boss of Sydney FC, the club where he spent a year as a player.
Macarthur said the club and Yorke had "mutually agreed to part ways, effective immediately".
According to Macarthur, the agreement will allow Yorke "to pursue other opportunities".
His assistant, fellow former Trinidad and Tobago international Russell Latapy, has also left Macarthur.
Macarthur, based in the south-west suburbs of Sydney, are competing in their third A-League campaign. They won the Australia Cup under Yorke's leadership in October.
Yorke said of his departure: "I want to thank the chairman Gino Marra, CEO Sam Krslovic, all the ownership group as well as all the staff and fans of Macarthur FC.
"I leave the football club with a great team that will continue to challenge for more silverware."
Macarthur sit sixth in the A-League but have lost six of 13 games this season, while Sydney FC are worse off, in ninth place in the 12-team competition.
The News.com.au website said Yorke was set to step in at Sydney, although Corica remains in charge there for now, with his team suffering a 1-0 defeat to Western United on Saturday.
The A-League's official website reported Yorke and the Macarthur board clashed after Friday's 1-0 defeat to Adelaide United.