"The Board of Directors would like to thank (Zola) for his contribution and wish him well for the future. The club will now be focusing its efforts on seeking a replacement," a statement read on the club website (www.whufc.com).
Former Chelsea and Italy striker Zola joined West Ham in September 2008 and has endured a turbulent time at the east London club, culminating in narrowly avoiding relegation this season.
Heavily in debt following the collapse of former owner Bjorgolfur Gudmundsson's business empire, the club was bought by ex-Birmingham City owners David Gold and David Sullivan in January and Zola's future had since been the subject of constant speculation.
Zola had hinted at disagreements with the club's boardroom powerbrokers in April when he said he had not been consulted over a bid for West Bromwich Albion midfielder Graham Dorrans.
The diminutive 43-year-old said he had been surprised to learn of the bid in a newspaper. West Ham finished 17th this season, one place and five points clear of the relegation zone.