Rossi departs Palermo again
The 50-year-old was sacked in February before being reinstated five weeks later and leading the Sicilians to eighth place in Serie A, the Italian Cup final and securing a berth in next season's Europa League.
"President Maurizio Zamparini and coach Delio Rossi met today to review their positions. They decided by mutual consent not to continue their working relationship," Palermo said in a statement.
Former Lazio boss Rossi has been linked by the media with the job at top-flight rivals Genoa.
Stefano Pioli, who led Chievo Verona to 11th in Serie A before leaving last week, is tipped to take over at Palermo.
"He [Pioli] is a possibility, well more of a probability," Zamparini told the Italian broadcaster Reterete24. "The new coach will be announced before tomorrow is over."