It’s understood the 53-year-old, who masterminded National Youth League titles in 2015 and 2017, was disillusioned with the direction the club was taking from the top down.
He will be replaced by Rado Vidosic, the veteran former Brisbane Roar caretaker and assistant, who was also on the coaching staff of Sydney FC, Melbourne Victory and Wellington Phoenix before last year taking charge of City’s W-League team.
The former South Melbourne stalwart, who also played in the Greek Superleague, held a number of coaching roles in Greece before joining City in 2012.
But 22 months after the arrival of Joyce he has become the latest coach who finds himself unable to work under the umbrella of the Englishman, who is himself out of contract at season’s end.
Despite being under fire for sixth-placed City’s lack of success - and the acrimonious departure of Bruno Fornaroli - Joyce may yet win a reprieve from the club’s owners, the City Football Group.
Both caretaker Michael Valkanis and assistant Joe Montemurro departed five months after Joyce’s appointment in June, 2017.
Valkanis followed Joyce’s predecessor John van’t Schip to PEC Zwolle in the Netherlands while Montemurro took charge of Arsenal women’s team.
Palatsides, who was also a first team assistant before Joyce’s arrival, has overseen a production line of promising youngsters, not least Socceroos star-in-the-making Daniel Arzani.
He’s also nurtured the likes of Moudi Najjar, Ramy Najjarine, James Delianov, Josh Cavallo, Connor Metcalfe and Dylan Pierias.
And he has helped Luke Duzel, Jordan Bos, Josh Varga, Thomas Lambiris and Ahmad Taleb push into the Joeys squad that qualified for the FIFA Under-17 World Cup to be staged in Brazil in November.
