Hired in 2014, to succeed Paulo Bento, Santos could not take Portgual past the quarter-finals of this year's World Cup in Qatar, losing 1-0 to Morocco.
"After one of the best participations ever by the national team in the final stages of the World Cup...FPF and Fernando Santos understand this is the right moment to start a new cycle," the FPF said in a statement.
"In addition to the titles won, Fernando Santos became the coach with the most games and most victories," FPF said. "It was an honour to have a coach and a person like Fernando Santos as the head of the national team."
In an emotional farewell video message, Santos opened by saying, "I leave with an enormous feeling of gratitude, enormous for the privilege of having been a selector and the honour of representing the country. It was a dream I realised, a life goal I fulfilled."
He went on to thank the players he's worked with, coaches and staff, as well as the fans.
"I have one last word for the Portuguese fans," he concluded, "from now on I will be one of many millions who cheer and support the Seleção. I will be in body and soul, as always, not on the pitch, but in the stands and wherever I am, singing our anthem and wishing that the team of all of us gives us many joys."
A legacy to remember
Despite Portgual's somewhat disappointing World Cup exit, Santos ends his time in charge of the team with an incredible legacy left behind him.
He leaves his post as the only coach to ever have won a major trophy with the Portuguese men's national team.
In 2016, Santos led his country to a historic victory over France in the European Championship. Three years later, a goal from Goncalo Guedes against the Netherlands was enough to crown Portugal as the inaugural winner of the UEFA Nations League.
He also managed Portugal in the 2017 Confederations Cup (losing in the third/fourth place playoff to Chile), the 2018 World Cup (eliminated in the last 16 by Uruguay), and the delayed 2020 European Championship (losing to Belgium in the last 16) prior to this year's World Cup.
He led the side in 109 matches, winning 67, with 23 draws and 19 defeats.
During his tenure, Santos granted debuts to 59 players, including names such as Bernardo Silva, Danilo Pereira, Ruben Neves, Renato Sanches, Joao Cancelo, Bruno Fernandes, Ruben Dias, Joao Felix, and Diogo Jota. Most recently, at the World Cup, he also handed first caps to emerging stars: Antonio Silva and Goncalo Ramos.
Next in line
FPF said its board would now start the process of selecting a new manager.
Various Portuguese media outlets have reported that names such as AS Roma manager Jose Mourinho (59), the national under-21 coach Rui Jorge (49) and Lille boss Paulo Fonseca (49) were being considered as possible replacements.
Mourinho arrived earlier on Thursday in Portugal's southern region, where Roma will play three friendlies, but remained silent when questioned by reporters about Santos' succession.
