Former Derby County boss Jewell had been in charge at Portman Road since January 2011 but has left the club following their 2-1 defeat at home to Derby County which stretched their winless run to 11 games.
The 48-year-old revealed earlier in the week that he planned to remain at the club after receiving backing from the club’s owner but has now ended his 21 month stint at the Tractor Boys.
Speaking to the club’s official website, Jewell said: "I could not have had any more support than I have done from Marcus Evans and Simon Clegg I have enjoyed working with both of them in my time as Ipswich Town manager.
"I've never hidden from the fact that our results have not been good enough"
"It's been a privilege to be manager of such a fantastic football club and I want to thank the staff and the supporters for the backing they have given me in my time at the club and wish Ipswich Town the best of fortunes ahead."
Meanwhile, club chairman Marcus Evans thanked Jewell for his efforts, stating: "Since he first walked through the door here, no one has worked harder to bring success to this Football Club than Paul Jewell.
"Unfortunately his outstanding commitment has not been rewarded by results on the pitch and having spoken with Paul at length, we feel it’s best for him and the Club if we go our separate ways.
"I'm bitterly disappointed – as is Paul – that it has not worked out as we had hoped when he became our manager 21 months ago and I would like to put on record my thanks for his services to the Club and wish him every success in the future."
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The club's chief executive, Simon Clegg, added his regret at Jewell's departure and revealed that assistant manager Chris Hutchings will take over as caretake boss.
He said: "I am bitterly disappointed that we have parted company with Paul but we accept that this is in our respective best interests.
"Paul has worked tirelessly to try and deliver the levels of success on the pitch which we all aspire to but the recent results and our position in the table required us to make a change.
"The search for a new manager of this football club is well underway and I am confident that we will find the right man to get the best out of the players, both individually and collectively, and lead the team to future success.
"The immediate focus is to ensure we secure three points on Saturday and in this regards I have asked Chris Hutchings to take over as caretaker manager."