The highly-respected Canadian stepped down after his second spell with the club, which was in its sixth season.
English-born Canadian Yallop, 49, is the reigning Major League Soccer coach of the year after leading the 'Quakes to the Supporters' Shield last season, and was in the sixth season of a second turn as the club's coach. He previously helmed San Jose between 2001-2003 and also had spells with the Canada national team and the LA Galaxy.
Assistant Mark Watson has been named interim manager for the rest of the 2013 campaign.
"(Team President Dave Kaval), (General Manager John Doyle) and I met earlier this week and we mutually agreed that it was time for the club and me to move in different directions," Yallop said. "Mark Watson is an excellent coach and the team is in very good hands. I want to thank the entire Earthquakes organization for my time here. I want to thank the players and coaching staff that have been here over the past five and a half years. They made my job really enjoyable with their professionalism and hard work, especially last year, which was a magical season, and one I will never forget."