Gattuso had earlier announced his decision to leave following an 18-month spell with the club
Gennaro Gattuso has left his role as AC Milan manager by mutual consent.
It will now be their sixth consecutive season without being in Europe’s elite club competition.
CEO Ivan Gazidis said in a statement: “I have had the privilege to get to know Rino Gattuso over the past six months since my arrival at the club.
“Rino has given everything to our efforts this season, and has worked tirelessly, always taking full responsibility, putting the club above every other consideration.
“I want to say from the bottom of our hearts, thank you Rino.”
Gattuso had earlier announced he would be leaving the role, which he took in November 2017 after a spell as a youth coach, despite his contract running until 2021.
He also confirmed he would not be taking any compensation.
“Deciding to leave Milan’s bench is not easy but it’s a decision I had to make,” he said, according to Repubblica.
“There was not a precise moment in which I decided, it was the sum of these 18 months as coach of a team that for me will never be like the others. Months that I lived with great passion, unforgettable months.
“Mine is a painful but thoughtful choice. Am I giving up a two-year contract? Yes, because my story with Milan can never be a question of money.”
The 41-year-old is a Milan club legend who made 468 total appearances between 1999 and 2012.
He also won two Serie A titles and two Champions Leagues during that time.