The 46-year-old former Leyton Orient manager has been on sick leave with a stress-related illness since January.
In his absence Alan Knill guided the Gulls to League Two safety after taking charge in February until Saturday's 3-3 draw with Bristol Rovers.
"The decision is based purely on footballing grounds, after falling from play-off contenders last season to just escaping relegation this time around, and early exits in all three cup competitions," a club statement said.
"Everyone at Plainmoor would like to thank Martin for his work over the last two years and we wish him every success in the future."
Ling joined Torquay in June 2011 and his first season at Plainmoor ended in a play-off semi final defeat to Cheltenham.
But he oversaw just eight wins before his final match in charge, a 1-1 draw with Exeter in mid-January.
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