Sportal.co.nz 23.Oct.2013Getty Images
The Argentine Rugby Federation announced the 39-year-old's five-year term as coach was over.
His contract was set to end in December but he has quite ahead of Argentina's Northern Hemisphere tour which includes Tests against England on November 9, Wales on November 16 and Italy on November 23.
Phelan, a 44-cap international for the Pumas, coached the side to the quarter-finals of the 2011 Rugby World Cup where they were beaten by New Zealand.
In 2012 Argentina joined The Rugby Championship but have been unable to get off the bottom rung of the ladder in those two years.
That resulted in some internal dissent among the coaching support staff which led Phelan to resign on principle.
It is expected the Jaguars coach Daniel Hourcade will take over the role.