Only a week after leading the Latics to a famous FA Cup victory over the Reds, the 40-year-old decides that "it is best that he steps aside" with his side 20th in League One
Despite the Latics' heroics in the cup, they are 20th in League One and only one point clear of Bury and Scunthorpe below them, both of whom have a game in hand.
Saturday's 3-1 defeat at Walsall, which took the side's run to one point from their last nine league matches, prompted the manager to leave his post.
A statement on the club's official website reads: "After yesterday's defeat to Walsall, Paul Dickov has decided that for the good of Oldham Athletic Football Club, it is best that he steps aside.
"Following the memorable wins against Nottingham Forest and Liverpool, when the squad proved what they were capable of, Paul had hoped these would be the catalyst to improved results in npower League One but this has proved not to be the case.
"He has been disappointed at the level of commitment and performances and feels that a change is needed if the club is to survive in League One.
"In nearly three years, Paul has shown his tremendous potential as a manager and the board of directors would like to express their appreciation for his commitment, both to the club and the fans.
"Everyone at the club wishes Paul and his family all the best for the future."
Oldham chairman Simon Corney had previously admitted that the situation was "very awkward" after the famous win over the Reds brought Dickov's fate into question.