Gatland, 61, was contracted until the 2027 World Cup but has departed by mutual consent, the Welsh Rugby Union (WRU) confirmed.
Cardiff head coach Matt Sherratt will take over as interim head coach for the remaining three games of the Six Nations.
WRU chief executive Abi Tierney said both parties had agreed an immediate change was “in the best interests” of the Wales squad.
In a statement, Gatland said: “I would like to thank the WRU board for the faith shown in me after a tough campaign throughout 2024 and affording me the time and resource to try to turn things around for this 2025 tournament.
“We have worked hard, we have a talented young squad that is developing and have been desperate to turn potential into results but now is the right time for a change.
“I’ve reached the end of this particular chapter, but remain grateful to all those in Wales who have supported me, the players who have played for me and all those around me, especially my management team, who have contributed to what we have achieved over the years.”
No announcement has been made on the rest of the current coaching team.