The Premier League legend was appointed in October, but failed to turn around the club’s National League fortunes.
On Tuesday night, the Coasters went down 2-1 at home to relegation rivals Boston United.
The result kept the side third from bottom, and now a new manager will take the club forward.
The former England and Sunderland striker’s assistant David Longwell will remain, and will be in charge until Phillips’ replacement is found.
“AFC Fylde can confirm that the club and Head Coach Kevin Phillips have mutually agreed to part ways with immediate effect,” a statement read.
“We would like to thank Kevin for his efforts and wish him well for the future.
“Current assistant coach David Longwell will take charge of the team on an interim basis until we announce a permanent replacement.”