The former Sevilla coach was sacked after his side suffered a 2-1 home reverse to Sturm Graz in the Europa League last Thursday, but Jimenez's initial compensation demands appeared to be beyond the Greek side's means.
However, following crunch talks, which lasted for almost 10 hours, AEK have finally agreed on a payout, allowing them to step up their search for a successor.
"Manolo will always be part of the history of our club having won us the Greek Cup for the first time in many years," a statement on AEK's website reads.
Jimenez was initially a success at the Olympic Stadium, lifting the Greek Cup in May, but despite winning three of their four league games so far this season, they have made a losing start in European competition, leading to his departure.
Reports in Greece have since suggested that ex-player and coach Nikos Kostenoglou is the favourite to claim the AEK hot seat.