A statement from the board of directors confirmed that the 57-year-old had stepped down from his position after failing to keep the club in the Championship following his appointment in November.
Hughes took over from Peter Grant with the Pars bottom of the table and without a win after 12 games, but despite an initial upturn, was unable to turn results around sufficiently to avoid a relegation play-off, where a 1-0 aggregate defeat to Queen's Park sealed the club's fate.
The club statement read: “John joined our club in late 2021, in very difficult circumstances and the DAFC Board would like to thank him for his hard work and endeavours over the last few months and wish him and his family every success in the future."
Dunfermline chairman and CEO David Cook intimated that the process of finding a new manager had already started.
“Following the disappointing end to the season, we updated supporters on certain off-field changes and footballing reviews happening at the club," he said.
"Over the past week, we have seen Steven Whittaker and John Hughes both leave the club.
"Our search for a new manager is well underway and we will commence interviews with preferred candidates shortly.
"Our aim is to target a first team coaching staff with fresh energy, drive and enthusiasm to help take the club forward in League 1.
"We know supporters are eager for information around the first team and we understand this. As soon as we are able to update supporters further, we shall.
"Thanks for your patience at this moment.”