The Norwegian's future in South Wales was cast in doubt following Tuesday night's 1-0 home defeat against Middlesbrough, and his eight-month stint in charge of the Bluebirds has come to an end this afternoon with immediate effect.
Adding to a short statement on the Welsh side's official website confirming the news, chairman Mehmet Dalman said: "Having spoken with Ole on deciding the best course of action for all parties, I'm sorry to say that we have agreed that it is in the best interest of the club for us to go our separate ways.
"Ole has been a wonderful professional to work with since his arrival at the club. Due to a difference in philosophy of approach to the game, we have decided to part company amicably. He and his family will always be welcome at Cardiff City. I know I have gained a good friend whom I wish well and remain confident in his future success."
Solskjaer is said to have undergone lengthy talks with owner Vincent Tan following a four-game run without victory, and the Malaysian added: "Ole was hired by Cardiff City on our understanding and belief that he would help us fight relegation from the Barclays Premier League. Unfortunately that did not happen.
"After the club was relegated many people advised me to let him go, but I decided to keep Ole on for the Championship season. Regrettably our recent results do not justify Ole's continued role as manager at Cardiff. Ole has therefore decided to step down and I have accepted this.
"During my short association with Ole, I have found him to be an honest and hardworking professional, but unfortunately the football results were not in his favour. As long as I am the owner of this club, Ole and his family will always be welcome in the Chairman's Suite as my guests.
"I wish Ole the very best in his future career in football. We now begin the process of finding his replacement and working towards giving all our stakeholders in Cardiff City the results they deserve."
Danny Gabbidon and Scott Young will take charge of Cardiff for their trip to Derby County on the weekend, with the Bluebirds currently 17th in the Championship table.