Rose departs the Signal Iduna Park after just a season in charge.
The 45-year-old took over last summer but failed to mount a meaningful title challenge, finishing eight points behind champions Bayern Munich.
Dortmund failed to qualify from the Champions League group and were dumped out by Rangers at the first hurdle when they dropped into the Europa League.
Dortmund also failed to defend their DFB-Pokal title, getting dumped by Saint Pauli in the round of 16 stage.
A statement from Dortmund reads: “BVB and coach Marco Rose end their relationship.
“Following an intensive season analysis on Thursday, including Rose, Watzke, Zorc, Kehl, and Sammer, the club has decided to move forward, and wishes Marco Rose the best of luck in his next opportunity.”
“This is not an easy day for any of us, because the mutual esteem among us was, is and remains great. After a season that was unsatisfactory for various reasons, we had to realise that we did not get the maximum out of our possibilities in many sub-areas,” said club CEO Hans-Joachim Watzke.
“Despite a difficult season with many imponderables, I was convinced of our path. During our conversation, the impression matured in me that the 100 percent conviction of all those in charge was no longer there. In the end, we therefore decided together to end the cooperation,” Rose added in the official club statement.
