The news comes just two months after the Ghana Football Association (GFA) offered their backing to Appiah following a tumultuous World Cup campaign.
The African nation were eliminated from the group stages after taking just one point amid reports of a row over appearance fees, while Kevin Prince-Boateng and Sulley Muntari were suspended by the GFA for breaches of discipline.
Appiah was handed a stay of execution, but Ghana drew their opening Africa Cup of Nations qualifier 1-1 with Uganda on September 6 and not even a 3-2 victory at Togo four days later was enough for him to keep his job.
"The Ghana Football Association and Black Stars coach James Kwesi Appiah have agreed to mutually part ways," read a statement on the GFA's website.
"The two parties met on Friday morning to reach the agreement on the departure of Mr Appiah.
"The lawyers of the two parties will meet next week to decide on the severance package for Mr Appiah based on the contract of his appointment.
"The GFA wishes to thank Mr Appiah for his diligent service to the country as the coach of the Black Stars for the past two years. We wish him every success for the future."
Serbian Milovan Rajevac has been tipped to return to the post, having originally coached Ghana between 2008 and 2010.
Appiah served as Rajevac's assistant before taking the top job himself in April 20212.
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