The 55-year-old led the Tigers to play-off glory last season, beating Sheffield Wednesday 1-0 at Wembley to claim a place in the Premier League.
However, the former Manchester United defender had reportedly become unsettled at the KC Stadium and was interviewed recently for the England manager's job, prior to Sam Allardyce's appointment.
Bruce had previously admitted his desire to replace Roy Hodgson, describing the role as "the prime job that any Englishman would want".
"Following four incredible seasons with the Tigers including two promotions and our first ever FA Cup final, we can confirm that manager Steve Bruce has left the club by mutual consent," a statement read.
"The Board of Directors would like to thank Steve for all his efforts since his appointment in 2012 culminating in a glorious day at Wembley in May which saw the club bounce back into the Premier League.
"Steve has excelled in his role - both on and off the field - and will be remembered for being the most successful manager in our history to date.
"Steve Bruce wishes the club and the owners all the very best for the forthcoming Premier League season. Steve also wishes to place on record his thanks to the club's supporters for their unwavering support and also to all the players and staff who have worked with him during his time at the KCOM Stadium."
Former Manchester United assistant manager Mike Phelan will take caretake charge until Bruce's replacement is found.
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