The Dark Blues confirmed the news ahead of Sunday’s away trip to Livingston, which will be his last in charge.
McGhee has overseen just one win – over Hibs this week – and says he will hand over the reins to a ‘younger coach’ after the club’s secon-tier fate was sealed.
“When we took the job we had a real belief that we could stay in the division and we are disappointed that we did not achieve that target,” McGhee said in a club website statement. “My role at the club was that of a manager with Simon [Rusk] working as the coach alongside me. The Championship is a division that I feel is suited to a younger coach, one with energy, that is what the players deserve. I’m not sure my role is relevant in that environment.”
“I would also like to thank John for the opportunity, the players and staff for their commitment, and the fans for their support during my time in charge. I wish the club every success in the future.”
Rusk, McGhee’s assistant, will also leave to take up a new job with the English FA. The duo had been in charge at Stockport County in a role reversal before moving north to replace James McPake in February, though McGhee began in the stand, completing a previous SFA dug-out ban.