McLeish quits Blues by email
"Acting chairman Peter Pannu received an e-mail resignation from McLeish earlier today while away on business in Amsterdam," the club said in a statement on their website.
McLeish, a former central defender who played for Aberdeen and Scotland, established his managerial reputation at Motherwell, Hibernian and Rangers before taking over as Scotland manager in January 2007.
It proved a short-lived appointment as he moved south to replace Steve Bruce at Birmingham in November of that year.
Birmingham were relegated at the end of his first season but he brought them immediately back up for the 2009/10 Premier League campaign where they finished a creditable ninth, their highest position for more than half a century.
This year they shocked Arsenal in the League Cup final but the success was followed by dramatic decline in their league form that ended with their relegation after a last-day defeat at Tottenham Hotspur.
British media had earlier linked McLeish with a potentially controversial move across the city to take over the vacant Aston Villa manager's job following the resignation of Gerard Houllier through ill health and local bookmakers immediately made McLeish an odds-on favourite for that role following Birmingham's announcement.
McLeish was not the only managerial casualty on Sunday as Nottingham Forest, who missed out on promotion to the Premier League via the playoffs for the second successive season, sacked manager Billy Davies after two-and-a-half years in the job.