The 40-year-old, who will drive in the Dakar Rally in January, saw his side lose Sunday’s FA Cup final to underdogs Shanghai Shenhua and had frequent run-ins with the Chinese FA.
That two-legged defeat was Villas-Boas’s last chance of silverware, having finished second in the Chinese Super League (CSL) to Guangzhou Evergrande and lost in the semi-finals of the Asian Champions League.
“SIPG and the players have achieved success, progress and also had some regrets,” said a club statement, thanking Villas-Boas.
“We announce that SIPG and Mr. Villas-Boas will part ways towards their respective goals.”
Villas-Boas was touted as the next Jose Mourinho when he left Porto to take over at Chelsea in July 2011.
But he was sacked eight months after arriving at Stamford Bridge and went on to take charge of Tottenham Hotspur and then Zenit St Petersburg in Russia.
He joined ambitious Shanghai in November 2016, reportedly charged with winning at least one title at a team that already had striker Hulk and went on to sign fellow Brazilian international Oscar from Chelsea for an Asian-record 60 million euros.
Villas-Boas retained the support of some SIPG fans even as the trophy hunt faltered.
But he clashed with the Chinese FA (CFA) on several occasions over their running of the game and some media accused him of being arrogant and disrespectful.
He was banned for two games in June for a social media post supporting Oscar, who had been hit with an eight-match ban for starting a brawl during a CSL match.
Then in September Villas-Boas was also banned for eight matches after “insulting” a referee.
He had become increasingly irritable as the season wore on, making several subtle criticisms of the CFA and saying he was holding back saying more because he did not want to be banned again.
Villas-Boas was also fined $14,000 by the Asian Football Confederation (AFC) for his “offensive” comments aimed at a referee in the Champions League quarter-final second leg at Guangzhou Evergrande.
After that match he had also accused the home side of staging a series of bizarre road accidents to delay Shanghai arriving at the stadium.
– Premier League struggles –
Like Manchester United manager and fellow Portuguese Mourinho, Villas-Boas earned a move to Chelsea after success at Porto, including winning the Europa League.
But he was unable to replicate Mourinho’s brilliance at the Blues and was shown the exit after less than a season.
That did not dissuade Tottenham, whom Villas-Boas joined as manager in July 2012.
He lasted 17 months there before getting the sack and in March 2014 took over at Zenit, where he went on to win the league, partly restoring his reputation.
It has been reported that racing-enthusiast Villas-Boas now plans to take a break from football, partly to contest the Dakar Rally.
He will drive a Toyota Hilux in the two-week race which starts on January 6 in Lima and criss-crosses the Andes before finishing in Argentina.