Seedorf was appointed head coach of Deportivo in February, but the former Netherlands international could not prevent the Blues and Whites from being relegated from La Liga.
The 42-year-old only won two of his 16 matches in charge of the Galician club, and will not be signing a new contract this summer.
"In agreement with Clarence Seedorf, Deportivo would like to communicate that the Dutch manager will not be in charge of the first team next season," read a statement from the Spanish club. "Therefore, the relationship between the coach and the club will end upon the expiry of his contract at the end of June, 2018.
"The president, Tino Fernandez, told Seedorf personally that it has been a real pleasure to work with a professional on his level, someone with the capacity to work in the Primera Division.
"However, to take on a new challenge the club will look for a coach who can bring more experience and knowledge of the Segunda division."
Deportivo will play in the Segunda Division next season for the first time since 2014.