“Both the president, Luis Rubiales, and the sporting director, Jose Francisco Molina, have told the coach their decision,” the Spanish FA said in a statement.
The federation said they wanted to thank Luis Enrique and his staff for their work, but had decided to start a “new project”.
“The sporting direction of the RFEF has given the president a report, in which it was determined that a new project should start for the national team, with the objective of continuing the growth achieved in the last few years thanks to Luis Enrique and his colleagues,” added the RFEF.
Spain hammered Costa Rica 7-0 in their opening game in Qatar but suffered a shock defeat by Japan that resulted in a second-place finish in Group E.
Spain were strong favourites to beat Morocco in the first knockout round but lost 3-0 on penalties after the game finished 0-0 following extra-time.
“We dominated the game but we lacked a goal,” lamented Luis Enrique after the game.
“We could have been more effective in the final third, but I am more than satisfied with what my players did.
“They represented perfectly what my idea of football is.”
Spain last lifted a major trophy a decade ago at Euro 2012, while they have not won a single knockout game at the World Cup since triumphing in South Africa in 2010.
Luis Enrique took over in 2018 after Spain’s disappointing Russia World Cup showing, and led La Roja to the semi-finals of Euro 2020, where they were also beaten on penalties by Italy.