His departure comes 13 days after the club’s takeover by a Saudi-led consortium.
A club statement said: “Newcastle United can confirm that Steve Bruce has left his position as head coach by mutual consent.
“He leaves the Magpies after more than two years in charge, having steered the club to 13th and 12th-place finishes in the Premier League and reaching the quarter-final stage in both the Emirates FA Cup and Carabao Cup during his tenure.
“Newcastle United would like to place on record its gratitude to Steve for his contribution and wishes him well for the future.”
Bruce leaves three days after his 1,000th game as a manager ended in a 3-2 home defeat to Tottenham, during which disgruntled fans renewed calls for him to go.
“I am grateful to everyone connected with Newcastle United for the opportunity to manage this unique football club,” said Bruce.
“I would like to thank my coaching team, the players and the support staff in particular for all their hard work. There have been highs and lows, but they have given everything even in difficult moments and should be proud of their efforts.
“This is a club with incredible support and I hope the new owners can take it forward to where we all want it to be. I wish everyone the very best of luck for the rest of this season and beyond.”
Bruce’s assistant Graeme Jones will take charge of the team for Saturday’s trip to Crystal Palace, with the Magpies still awaiting their first Premier League win of the season and sitting just one place off the foot of the table.
The statement continued: “Graeme Jones will lead the team on an interim basis, starting with Saturday’s trip to Crystal Palace, and will be supported by the coaching team of Steve Agnew, Stephen Clemence, Ben Dawson and Simon Smith.
“The process of recruiting a new head coach is under way and an appointment will be announced in due course. The club will not be making further comment at this time.”