Watford manager Quique Sanchez Flores will leave the club after their final match of the season on Sunday.
The Spaniard, 51, was appointed in June 2015 following the club's promotion to the Premier League.
The Hornets are 13th in the Premier League, but have won just two of their past 11 top-flight games.
"The club and me don't have the same point of view about the season," said Sanchez, who also guided Watford to the FA Cup semi-finals.
"We don't have the necessary conditions to activate the clause to renew my contract so I will leave Watford as a consequence.
"I felt completely happy with this year and I have enjoyed this experience."
Former Real Madrid and Valencia player Sanchez will leave after Sunderland visit Vicarage Road on Sunday.
"We would like to thank Quique," said a club statement.
"He and the team achieved the target set at the start of the season of staying in the Premier League for a second year.
"Quique leaves with all our best wishes for the future and the knowledge he is always welcome at Vicarage Road."
The Hornets said last month they would only discuss Sanchez's future at the end of the season.
The club are now looking for their seventh full-time manager since being taken over by the Pozzo family in June 2012.
The Pozzo family also own Italian club Udinese and Spanish side Granada.
West Ham manager Slaven Bilic called the decision "sick" and "crazy".
He added: "I'm sorry for Quique. It's completely wrong, they've had a fantastic season."
Geoff Doyle, BBC Three Counties Radio sports editor
"Expect tears at Vicarage Road on Sunday as Quique Sanchez Flores waves goodbye to Watford fans. Let's be clear, Flores does not want to leave. It was the owners and board who made the decision.
"Supporters are divided, but the majority agree with the split. They are delighted to be playing Premier League football again next season thanks to Watford's form up to Christmas.
"As stupid as it sounds, Flores may have done too well in the first five months of the season and expectation was cranked up. Results in the new year have been worrying and so has their defensive style of play.
"It is hard not to feel that the job he had done up to that point had been more than good enough. But football is all about the here and now. For a lot of Watford fans, the damage has been done.