The 45-year-old's position had come under further scrutiny following the loss in Aveiro as supporters expressed their discontent at the final whistle.
Bento's international career began well as he guided Portugal to the semi-finals of Euro 2012 before the side finished second behind Russia in qualifying for this year's World Cup in Brazil and had to beat Sweden in a play-off to reach the tournament.
Portugal failed to shine once in South America and were eliminated at the group stages behind Germany and United States.
Bento remained in charge amid calls for him to quit before Sunday's loss to Albania in their opening Euro 2016 qualifier caused a rethink on his future and his exit was announced on Thursday.
"The Portuguese Football Federation announces that today, September 11, the contractual relationship ends with Paulo Bento," a statement read. "This was a decision made jointly between the Director of the FPF and Paulo Bento.
"We appreciate all that Paul Bento did for our team, including taking Portugal to EURO 2012 and the 2014 World Cup."
Portugal, who will begin the search for Bento's successor immediately, face France in a friendly on October 10 before their next Euro 2016 qualifier against Denmark.
