Russo, 55, leaves the club he won two league titles with as a player in the 1980s with two wins and eight defeats in 14 matches, 22 points behind runaway leaders Boca Juniors.
"We reached a complete agreement and I want to point out Miguel's goodwill in putting up no objections to what we had put to him and he will be paid up to his last day of work at the club," Estudiantes President Enrique Lombardi told reporters.
Russo, who steered Boca to the South American Copa Libertadores title in 2007, is the fifth coach to lose his job in Argentina this season during an Apertura championship dominated by his former club.
Former Paraguay coach Gerardo Martino is among favourites to replace him.
Boca, who have 32 points from 14 matches and are eight clear of second-placed Racing Club, were held 0-0 away by title holders Velez Sarsfield, winners of the Clausura in May, after their veteran defender Rolando Schiavi had a penalty saved.
"The result is not what we hoped for but neither is it bad given Boca's form," said Velez coach Ricardo Gareca, who admitted to reporters the visitors had had the better chances.
Racing won 1-0 on Saturday at home to Argentinos Juniors, who with Estudiantes and Banfield are three of the four most recent champions in a wide open Argentine league who now occupy the bottom three places in the Apertura table.
In a match that could settle the outcome of the championship, which has five rounds to go, Racing visit Boca the weekend after next following the international break for South American World Cup qualifiers.
Argentina coach Alejandro Sabella completed his squad by adding San Lorenzo goalkeeper Agustin Orion, Boca defender Clemente Rodriguez and Estudiantes pair Leandro Desabato and Rodrigo Brana as home-based players for qualifiers at home to Bolivia on Friday and away to Colombia four days later.
