Fernando Santos stepped down as the Portugal coach days after a shock exit at the FIFA World Cup 2022 in Qatar, following a 0-1 loss to Morocco in the quarterfinal.
In an emotional video message, Santos said that being Portugal's coach was a "dream come true" and a "life goal" fulfilled.
Santos had raised eyebrows by benching Portuguese star striker Cristiano Ronaldo in the last two matches of their campaign. "When you lead groups, you have to make some difficult decisions," he said in the message. "It's normal that not everyone was happy with the choices I made but the decisions I took were always thinking about what would be best for our team."
In a statement on Thursday, the the Portuguese Football Federation (FPF) said both parties agreed to terminate the contract as it was the "right moment to start a new cycle".
Santos took over as the Portugal coach in 2014 and led the country in 109 matches. Portugal won the European Championship in 2016 and UEFA's inaugural Nations League in 2018-19 under him.
"In addition to the titles won, Fernando Santos became the coach with the most games and most victories," FPF said. "It was an honour to have a coach and a person like Fernando Santos as the head of the national team."
FPF said its board would now start the process of selecting a new manager. Various Portuguese media outlets have reported AS Roma manager Jose Mourinho, the national under-21 coach Rui Jorge and Lille boss Paulo Fonseca were being considered as possible replacements.
Mourinho arrived earlier on Thursday in Portugal's southern region, where AS Roma will play three friendlies, but did not comment on his chances of succeeding Santos.