The 37-year-old, who led the Fife outfit to the cinch League Two title in his maiden campaign in the dugout, has decided to leave New Central Park in search of work in full-time football management.
Thomson, who also had three spells at Hibs in his playing days, was in the running for managerial vacancy at Raith Rovers earlier this month but was unable to agree terms. He remains on the shortlist for the vacant position at Dundee.
Kelty said in a statement: “Manager, Kevin Thomson, and assistant manager, Kevin McDonald, have today tendered their resignations which have been accepted by the club board.
“Over recent weeks it became apparent that Kevin’s aspirations lay away from Kelty Hearts Football Club.
“We would like to thank them both for their efforts whilst with the club. This resulted in our promotion to cinch League One, winning the league by 21 points and reaching the fifth round of the Scottish Cup for the first time in our history.
“We would like to wish Kevin Thomson and Kevin McDonald all the very best in their careers going forward.
“The club have begun the process of identifying a new management team, we will update further as the situation develops.”
Thomson joined Rangers from Hibs in a £2million deal in 2007 and spent almost four years at Ibrox before being sold to Middlesbrough for the same fee.
He also earned three caps for Scotland.