Gerrard had been in charge since the summer of 2023 and a year ago signed a new deal to take him through to 2027.
"Ettifaq football club and Steven Gerrard have mutually agreed to part company," the club said in a statement.
Last season, Al Ettifaq finished sixth but he departs with the club 12th in the 18-team Saudi Pro League, having lost eight of their 17 matches.
He has taken charge of 59 matches in all competitions, winning just 23.
"From the first day I was warmly welcomed and I have enjoyed the chance to work in a new country with a different culture," said Gerrard.
"So overall I have learnt a lot and it's been a positive experience personally and for my family as well.
"But football is unpredictable and sometimes things don't go the way we want."