SFA officials confirmed the news, following a board meeting at Hampden Park on Monday.
Scotland has failed to qualify for the World Cup in South Africa next year and also suffered a miserable 3-0 defeat to Wales on Saturday.
SFA chief executive Gordon Smith said: “The decision was taken after a meeting with the board of directors and, subsequently, the national coach. The board was in unanimous agreement.
“It should be stressed that the decision was not a direct consequence of Saturday’s unacceptable 3-0 defeat to Wales but, rather, a realisation that the expectations of the supporters, the Scottish FA and George himself, were not being met.
“I should point out that the Scottish FA stands by its decision to give the national coach our full support despite failure to qualify for the World Cup play-offs.
“It would have been negligent not to have given George every opportunity to rebuild and revitalise the squad in light of the improved performances in the last two qualifiers against Macedonia and Holland.
“Unfortunately, the adverse results in the two subsequent friendly matches against Japan and Wales provided confirmation that the improvement could not be sustained.
“On a personal note, I would like to thank George for his contribution and, on behalf of the Scottish FA, I wish him all the best for the future.”
In a short statement Burley said: “I would like to take the opportunity to express my thanks to my backroom team, the Scottish FA, the players and the Tartan Army for the support they have shown throughout my tenure as national coach and I wish the national team success for the future.”
