Villa reserve team manager Kevin MacDonald has assumed the role of caretaker boss.
O’Neill told Villa’s official website: “I have enjoyed my time at Aston Villa immensely.
“It’s obviously a wrench to be leaving such a magnificent club. I would like to pay tribute to the Villa players, my coaching staff and the Villa supporters for all the support and encouragement they have given both the club and me personally during my time as manager.
“I wish them all the best for the future. I will obviously be assisting the club in the immediate short-term with regard to the handover of my duties.”
Paul Faulkner, chief executive of Aston Villa, said: “The club would like to thank Martin for the great work he has done at Aston Villa over the past four years.
“He has helped to establish the club in the upper echelons of the Premier League, has taken us to Wembley and we have also qualified for European competition for the past three seasons under his management. We wish him the best in the future.”
An additional statement from Villa read: “No further comment will be made by either Aston Villa or Martin O’Neill until further notice.”