The former Manchester United and England right-back has been shown the door by the Spanish club after guiding the team to only three wins from 16 La Liga games.
The 2-0 home defeat to Celta Vigo on March 20 was Valencia's third successive loss and left them in 14th place in the table, just six points above the relegation zone.
A statement from the La Liga club read: "After careful consideration, the club have decided to make a change with the best interests of the Valencia CF moving forward this season. We thank Gary for his work at Valencia and wish him the best in the future."
Neville, 41, also issued a statement on the club's website following his departure, which read: "I want to thank Valencia, the fans, the coaching staff and players."I would have liked to continue the work I started, but I understand that we are in business based on results and in 28 games we have seen 10 wins, seven draws and 11 defeats, which is not the level demanded by me or by this club."
Pako Ayestaran, who was assistant coach of Valencia from 2001 to 2004 under Rafa Benitez, has been appointed as head coach of the club until the end of the season.Neville was appointed as Valencia manager on a six-month contract on December 2 after Nuno Espirito Santo decided to step down from the position and combined the role alongside his duties as England coach.
However, he has now departed the Mestella after returning from England duty for the friendlies against Germany and the Netherlands.The role with Valencia was Neville's first move into management following a trophy-laden playing career with Manchester United, where he won 20 honours including eight Premier League titles and two Champions League crowns.
He was assisted at Valencia by his brother and former United team-mate Phil, but they were unable to provide any upturn in the club's fortunes and he departs with Los Che 14th in the La Liga table with 34 points.Under Neville's guidance, Valencia were also knocked out of the Champions League following a 2-0 home defeat to Lyon in December, a result which forced them into the Europa League, from which they also exited earlier this month after losing on away goals to Athletic Bilbao.
Neville did help Valencia reach the semi-finals of the Copa Del Rey, but they bowed out at that stage after losing 8-1 on aggregate to Barcelona.Valencia president Peter Lim, who appointed Neville as manager, is also a majority stakeholder in English non-league side Salford City - a club part-owned by the Neville brothers, Nicky Butt, Ryan Giggs and Paul Scholes.
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