The federation said it had reached a mutual agreement with the 65-year-old Dutch coach to end the contract that was due to expire next summer.
“We thank Guus Hiddink for services rendered during his term and wish him a healthy and happy life,” the federation said.
Turkey managed to hold Croatia to a 0-0 draw in the second leg of the Euro 2012 playoffs on Tuesday, but Croatia claimed a place in the final tournament 3-0 on aggregate. After the match, Hiddink indicated he was likely to stand down.
“I think this is my last match with this team, there is a high probability of that,” Hiddink said.
Turkish media reported that Hiddink had bid farewell to the players in Zagreb and did not return to Istanbul with the team.
The Turkish federation did not say who was expected to replace Hiddink, who was appointed in 2010, but Belediyespor coach Abdullah Avci is considered to be a top contender for the post.
Hiddink did not rule out a return to Chelsea, where he managed between February and May 2009, leading them to FA Cup success. He has a good relationship with the Premier League club’s Russian owner Roman Abramovich, and has again spoken fondly about his time in London.
“I’m going to take some time off and then we will see what happens, but I had a wonderful time in England,” Hiddink said. “It was great at Chelsea, a terrific time, but that doesn’t mean I am ready to start tomorrow. I need some time to reflect.”
“I’m not ready to retire, I like to be involved with a team on a daily basis, but maybe I am ready to step out of the limelight a little bit, away from the cameras. Hopefully, I will still be involved but perhaps it will be as an adviser or a consultant. I don’t see myself working in the Netherlands.”