Sportal.co.nz 09.Jul.2013Getty Images
The New Zealander will be replaced by Queensland Reds director of coaching Ewen McKenzie, with the Australian Rugby Union expected to announce the appointment on Tuesday.
McKenzie has beaten Brumbies coach Jake White to the position and looks set to be in charge through to the 2015 Rugby World Cup.
McKenzie, 48, was part of the 1991 World Cup-winning Wallabies team and served as an assistant coach under Rod Macqueen and Eddie Jones.
Deans has been released from his two-year contract six months early, with the payout figure believed to be in the region of $400,000.
The 53-year-old, who became the first foreign Wallabies coach when he took over in 2008, saw Australia to 43 wins, 29 losses and two draws.
While Deans led the Wallabies to Tri-Nations success in 2011, the same year they finished third at the World Cup, there were several low points.
He oversaw just three wins in 18 attempts against New Zealand and was in charge during two losses to Scotland - 9-8 at Murrayfield in 2009 and 9-6 in Newcastle in 2012.
The record loss to the Lions at ANZ Stadium on Saturday night signalled the end of his time in charge.