Ante Milicic has called time on his stint in charge of the Matildas to focus on his job as A-League expansion club Macarthur FC's inaugural coach.
The former Socceroos striker was named Matildas head coach in February last year, taking the reins after the controversial sacking of Alen Stajcic.
Milicic successfully led Australia's national team to qualify for the 2020 Olympic Games while they made the round of 16 at the 2019 Women's World Cup in France.
In May of 2019, he was unveiled as Macarthur FC coach on a three-year deal - with his tenure to commence at the conclusion of the Tokyo Olympics.
However, the postponement of the Games until 2021 due to the COVID-19 pandemic forced Milicic to change those plans.
FFA boss James Johnson on Sunday confirmed Milicic's departure.
"FFA respects Ante's decision to honour his contract with Macarthur FC," Johnson said in a statement.
"We would have loved Ante to remain in the role for Tokyo 2020 and beyond, however FFA and Ante agree that overseeing two elite teams is not a workable solution, with both programs deserving of, and requiring, complete focus."
The 46-year-old said he was disappointed to have to resign but felt he had to honour the commitment he made to Sydney's third A-League club.
"I have enjoyed the past 18 months with the Matildas immensely and, in an ideal world, we would have been in Japan right now just days away from the start of the Tokyo 2020 Olympic Games," he said.
"Truth be told, I have simply chosen to honour the commitment I made to Macarthur over a year ago, and hope that the Matildas' players, staff, and fans, many of whom I have grown close with, will accept that."
Milicic will be joined at Macarthur by his Matildas assistant Ivan Jolic and technical analyst Kate Cohen.
FFA will immediately commence the recruitment process for a new Matilda coach.
"We expect there will be no shortage of interest in this prestigious role, particularly given all that the team has on the horizon," Johnson said.
The Matildas have the Olympics next year, the 2022 AFC Women's Asian Cup and the FIFA Women's World Cup in Australia and New Zealand in 2023 to look forward to.