The former England manager leaves the Dutch outfit after a second spell amid protests and demonstrations after defeat to Heerenveen left the 2010 champions fifth in the Eredivisie
McClaren returned to the Dutch club in January 2012 but couldn't replicate the success he enjoyed in his first stint in charge, when he won the league title.
Defeat to Heerenveen at the weekend left his side fifth in the league, six points behind leaders PSV Eindhoven with only four points out of the last six games, causing fans to turn on the Englishman.
And after losing the support of the fans and the board the former England manager decided to walk away from the position despite being contracted until 2014.
A statement from McClaren to the club's supporters read: “After the defeat to Heerenveen on Saturday the board of FC Twente and I tried to find a solution to the difficult period the team has been going through.
"We talked about the expectations of the club, how European qualification was key each season and finishing in the top four.
"Despite being joint top at the winter break and second four weeks ago, recent results and performances have seen criticism, protest and demonstration from both supporters and the media.
"We talked about how we could change the situation and relieve the pressure on the team which was clearly effecting its performance.
"Saturday’s result has seen further adverse reactions and with two home games coming up we feel the team needs the support and backing from the supporters.
"I also needed assurances about my position both now and in the future which I know in the present situation is difficult.
"After much discussion and deliberation those assurances weren’t forthcoming and we have agreed it’s in the best interest of the club that I leave.
"We agree the club is bigger than any one individual and Twente is too big in my heart to stand in the way of its progress!
"I leave the team, with ten games to go, still able to achieve its expectations of a top four finish, which I am positive they will do!
"I leave a proud man to have managed Twente, it’s brought me many good memories and one of the greatest days in my career when winning the title in 2010.
"The support received from the club, staff, players and fans has always been much appreciated and l depart sad and disappointed it’s ended in these circumstances, but I wish the staff and the team success in the future.’’