The Conference club made the announcement on Saturday following their 2-1 loss to Chester, which left them 10th in the fifth tier of English football.
After joining the club as player-coach in October 2012, the former Ajax, Juventus and Tottenham midfielder oversaw Barnet's relegation from the Football League last season, and has found himself at the centre of a number of controversies of late.
The 40-year-old, who earned 74 caps for the Netherlands, chose to wear the number one shirt usually reserved for goalkeepers during the 2013-14 season, before calling time on his playing career in December after receiving three red cards in six matches and claiming referees were targeting him and his squad.
Davids also angered fans by allegedly refusing to travel to some away matches, and played himself in a variety of positions for the club.
A statement on Barnet's official website read: "Everybody associated with the club would like to thank Edgar for his contribution during his time here and for his help in putting together the current team structure.
"The club would also like to wish Edgar the very best of luck in what we have no doubt will be the continuation of an illustrious career."
No announcement has yet been made with regards to Davids' successor.
