The Italian soccer federation announced the news in a statement on Friday, thanking Gattuso "for the dedication and passion" during his nine months in charge.
Italy's chances of reaching this year's tournament in North America ended on Tuesday after a penalty shootout loss to Bosnia and Herzegovina in a qualifying playoff.
"With pain in my heart, not having achieved the goal we had set ourselves, I consider my experience on the national team bench to be over," Gattuso said.
Gattuso's departure comes a day after Italy's soccer federation president Gabriele Gravina resigned, along with Gianluigi Buffon, who was the national team's delegation chief.
The defeat to Bosnia added more misery for four-time champions Italy after being eliminated by Sweden and North Macedonia, respectively, in the qualifying playoffs for the last two World Cups.
Gattuso took over from the fired Luciano Spalletti in June with the squad already in crisis mode following a defeat at Norway in their opening qualifier.
Gattuso had been given a contract until the end of this summer's World Cup, with an automatic renewal until 2028 if Italy returned to soccer's biggest stage.
"The Azzurri shirt is the most precious asset that exists in soccer, which is why it is right to immediately facilitate future coaching staff decisions," Gattuso said.
Among the candidates to replace Gattuso are Roberto Mancini, Simone Inzaghi, Antonio Conte and Massimiliano Allegri.
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