Gregory quits as Ashdod coach
The former England midfielder said he and Israeli assistant Itzik Ovadia agreed to leave after hearing that Yossi Mizrahi, a former Ashdod coach, could be returning next season.
"The speculation around a new coach coming made us think about it and if we are not going to be here next year we may as well go now," said Gregory in a video interview with the sports website www.one.co.il.
"It wasn't an easy decision to make but we both decided it was in the best interests of everybody."
Ashdod ended the season 13th in the 16-team league, meaning they must fight to avoid relegation in a six-club playoff.
Gregory, who also used to manage Derby County and Queen's Park Rangers, was in charge of relegated Israeli side Maccabi Ahi Nazareth last season.
"It was a great privilege to have John Gregory at our club," said Ashdod chairman Jacky Ben Zaken.
"Our situation is not good and I have told the players that if I could I would replace all of them because the fault is not with the coaching staff."