The experienced manager leaves the National League North Tigers little over a week after guiding them into the play-offs.
In a hard-to-believe final day, the club squeezed into the top seven but we’re defeated on penalties at Brackley Town in the Eliminator last Wednesday.
But incoming chairman Patrick Chambers announced changes are coming on and off the pitch.
Gloucester will revert to part-time status next season - and they will have a new manager guiding them, too.
King, who oversaw the club’s rise from 15th when he joined in September, has quit as the club’s search for a new boss begins.
Chambers announced in a candid statement: “Steve King has met with myself and Nicky on several occasions and our discussions have been constructive and friendly.
“Clearly the landscape has changed for Steve since he joined back in September and there is no doubting what a wonderful job he has done since taking over as manager of the club.
“I have made it clear that I would like to see him stay at the club as I also see him as a top manager and one that I would enjoy working with.
“We do have to acknowledge the fact that he joined under current Chairman Alex and expectations were set along with budgets.
“Steve is aware of the losses that are currently being covered by the owners and that we have to move to a sustainable model, which will see us go back to a part time format.
“This is not a model that suits his personal ambition and circumstances and to date he has expressed his desire to leave the club amicably.
“This is something that we have to accept and I know our fans will be disappointed in reading this news, but we must respect that decision and thank Steve for the amazing job he has done and wish him well for the future.
“Our search for a new manager begins now and I am sure there will be some really good candidates put themselves forward and I hope to make a decision in plenty of time to get recruitment right for next season.
“A new manager will need to buy in to recruiting the best local players possible and in developing young talent. It is hoped that some of the current squad will want to remain with the club too and I am sure any new manager will want the opportunity to speak with the current squad and explore all options.”