The decision comes just six days after the Cherries were relegated from the Premier League after five years by a solitary point.
In a statement released by Bournemouth via their official club website on Saturday night, Howe said there was a collective feeling that "now is the right time for the club to go in a new direction" after agreeing his exit during talks with the club hierarchy.
“Having spent a total of 25 years with the club as both a player and a manager this decision - made together with the club - is one of the hardest I’ve ever had to make," he said.
“Bournemouth will always be in my heart, but I firmly believe that now is the right time for the club to have a change.
“I have always ensured that every decision I have ever made as manager has been in the best interests of the club and its supporters, and this is no different.”
Howe's future was subject to speculation following a difficult season that ultimately ended in Bournemouth's relegation back to the Championship, which came despite a final day win at Everton as rivals Aston Villa's draw with West Ham ended any hopes of a last-gasp reprieve.
In total he had spent 25 years with the club as a player and manager, taking them from the depths of the fourth tier to the Premier League in truly remarkable fashion, with that run only interrupted by a near two-year stint in charge at Burnley that ended with his return to Bournemouth in 2012.
Howe - who penned a heartfelt open letter to fans upon his departure from the Vitality Stadium - managed Bournemouth for 450 games across two spells that totalled 11 years.