The 39-year-old took charge of the Conference club in September 2011 and last year guided them to FA Trophy success at Wembley.
However, the decision for Morrell to depart has been taken with the club 10th in the table.
"I feel it is in the best interests of both Wrexham and me to make a change now, so that we can all plan for the future with certainty," he told the club's official website.
"I'm disappointed with how this season has gone, as I desperately wanted to lead the club I love back to the Football League where I feel it belongs. However, I'm really proud of my achievements over the last two years and to see 20,000 Wrexham fans celebrating with me holding the FA Trophy will live long in my memory.
"During my time here I've been treated with the utmost respect by the board and I'd like to thank them and the fans for their support, as both a player and manager."
Billy Barr has been given the responsibility on an interim basis.