Martino's Miami, who are led by Argentina talisman Lionel Messi, topped the MLS regular season standings to win the Supporters' Shield with a record-breaking haul of 74 points in 34 games.
However, they crashed out in the first round of the playoffs at the hands of ninth-seed Atlanta United - a team that won the MLS Cup under Martino in 2018.
Miami had also failed to move past the last-16 in the Leagues Cup while they were knocked out of the CONCACAF Champions Cup by Mexican club Monterrey in the quarter-finals earlier this year.
The club said the search for a new coach was underway.
"It has been an honour to work at such a special Club, and to lead such a special team," Martino said in a statement. "I depart with nothing but gratitude for my time here and would like to offer sincere thanks to everyone that made it possible."
Martino, who coached Barcelona a decade ago before a two-year stint managing the Argentina national team, joined Miami in June 2023.
He guided them to the Leagues Cup trophy last year - the club's first major honour since former England skipper David Beckham formed the expansion team.
Along with 37-year-old Messi, Miami also signed his former Barcelona teammates Luis Suarez, Sergio Busquets and Jordi Alba.
Although Messi missed a big chunk of the 2024 season with injuries and Copa America commitments, he and Suarez finished the campaign with 20 MLS goals each.
Miami beat Atlanta 2-1 in the first game but they lost the next two to crash out of the playoffs.
As Supporters' Shield winners, Miami also qualified for the inaugural 32-team FIFA Club World Cup that will be held in the United States in June-July next year.