The La Liga outfit have failed to replicate last season's success, which saw them finish sixth, in a year headlined by financial difficulties.
They sit 13th in the table with one match of the campaign remaining – a home clash against Levante on Friday – and have decided to dispense with the services of the German.
Schuster, who replaced Manuel Pellegrini in the role, announced at a news conference on Thursday that he would not be in charge next season.
And although the 54-year-old was disappointed with the decision, he added that he was "very happy" with what he had achieved.
Malaga were in danger of being relegated earlier this season, sitting 17th for periods during February, but have secured their survival after a mid-season scare.
"Yesterday they told me that I wouldn't be continuing," Schuster said.
"But it wasn't a great surprise because I had a feeling that was what would happen.
"I am leaving very happy because we have done our work and everything is fine. I will look for another job.
"That is the decision and I need to respect it. They didn't tell me the reason why I wouldn't be continuing, but it doesn't matter.
"I don't agree with the decision because I think I was up to the job, but the club have an important responsibility and it is something I need to accept.
"There is one more match for everyone to assess, but the most important thing is that we have reached our objectives.
"Tomorrow we will enjoy the match without tension. We want to finish with a win."
Schuster last week revealed that he would be interested in taking over at Eintracht Frankfurt, with Armin Veh set to return to Stuttgart.
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