Thompson spoke with owner Tony Smith at around 1.30pm on Monday afternoon to inform him of his decision, with the likelihood being that any new head coach will be put in place until the end of the season uinitially.
Player-assistant coach Mark Matheson has been placed in temporary charge of the team on a day-to-day basis while Smith and his team set about appointing a new permanent head coach.
In a short statement, the club said: “The Sheffield Steelers wish to confirm that Paul Thompson has left the club for personal reasons. The club wishes to thank Paul for his hard work and effort here over the past three and a half seasons.
“Mark Matheson will be asked to take on the coaching duties in the interim period until a new head coach is appointed. A further statement will be made by the club shortly.”
News of Thompson’s departure comes after a stuttering start to the 2018-19 season by the club in both the Elite League and the Challenge Cup.
During the summer, Thompson – who also filled the role of general manager – oversaw wholesale changes to his Steelers’ roster, bringing in 16 new faces following the first trophyless campaign in his three-year tenure.
Two of those signings – twin brothers Matt and Ryan Rupert – were released after just six games, with Thompson last week threatening further changes to his squad after a run of poor results.
At the weekend, he saw an improved display in a 3-2 Challenge Cup win over arch-rivals Nottingham Panthers, before seeing his side crash 5-2 on the road in the league at his former club Coventry Blaze.
In recent weeks, Thompson had come in for fierce criticism from a section of the club’s support, particularly on social media, while boos dicould be heard ringing out in small parts of the home crowd in recent Sheffield Arena games.