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Gregory,56, had been in charge at the Yud-Alef Stadium for nearly a year, though poor form - without a league win in three months - led to rumours that he would be replaced by predecessor Yossi Mizrahi, who was reappointed on Tuesday.
Gregory was introduced to Israeli football in December 2009, when he took over at struggling Ahi Nazareth, though he only lasted five months as the side were later relegated that season.
He then moved to Ashdod where he was expected to bring the club success, however The Dolphins ended the season in 13th place and are currently fighting for their premier league status, competing in a relegation play-off alongside five other clubs.
Gregory said: "The speculation around a new coach coming made us think about it and if we are not going to be here next year we may as well go now.
"It wasn't an easy decision to make, but we both decided it was in the best interests of everybody."
Ashdod Chairman Jacky Ben-Zaken said: "It was a great privilege to have John Gregory at our club. Our situation is not good and I have told the players that, if I could, I'd replace all of them because the problem is not the coaching staff."
Gregory was introduced to Israeli football in December 2009, when he took over at struggling Ahi Nazareth, though he only lasted five months as the side were later relegated that season.
He then moved to Ashdod where he was expected to bring the club success, however The Dolphins ended the season in 13th place and are currently fighting for their premier league status, competing in a relegation play-off alongside five other clubs.
Gregory said: "The speculation around a new coach coming made us think about it and if we are not going to be here next year we may as well go now.
"It wasn't an easy decision to make, but we both decided it was in the best interests of everybody."
Ashdod Chairman Jacky Ben-Zaken said: "It was a great privilege to have John Gregory at our club. Our situation is not good and I have told the players that, if I could, I'd replace all of them because the problem is not the coaching staff."
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