Luis Rubiales, head of the Spanish FA, will reportedly suggest appointing Luis Enrique as the new boss in a meeting on Monday morning, although Roberto Martínez and Quique Sánchez Flores have also been considered as potential candidates.
Spain subsequently qualified from the group stage but went out to hosts Russian Federation at the last-16 stage following a penalty shoot-out in Moscow.
"The last Spanish coach declined to return to his previous position as sports director of the RFEF to seek new horizons and undertake new professional challenges." read a statement on the RFEF's portal.
Draws against Portugal and Iran in between a narrow victory over Iran were followed by elimination at the hands of Russian Federation in the last 16.
"The Federation wants to highlight the professional and human values of an extraordinary athlete who wants the best of fortunes".
United States soldier killed, 2 wounded in apparent insider attack in Afghanistan
The incident marks the first combat fatality for the USA military in Afghanistan since April 30, and the second there this year. The ambush occurred in southern Afghanistan, U.S. military officials said in a statement without being more specific.
Speaking at a press conference that was not attended by the new coach, Rubiales said: "The decision has been unanimous".
"Thanks for everything, Fernando!".
The 48-year-old signed a two-year contract just a day after interim boss Fernando Hierro left his post.
Spain won only one of their four games in Russian Federation, a 1-0 victory over Iran in the group stage, and drew 3-3 with Portugal and 2-2 with Morocco.
Hierro's time as Spanish boss was short and not-so-sweet having spent just four games in charge, losing to Russian Federation on penalties in the knockout round of 16.