The Tigers appointed the former Bristol Rovers midfielder in September last year but he couldn’t turn their fortunes around.
With expectation high last season, they ended 17th - and a push for promotion was expected this time around.
But sitting in the lower half of the National League North, Tuesday’s draw at high flying Banbury wasn’t enough to convince the club’s board.
The club had won four times in the league, also defeating Hungerford Town in the FA Cup.
The club’s hunt for a new manager starts today.
A statement read: “Gloucester City AFC can confirm that the club have parted company with First-Team Manager Lee Mansell by mutual consent.
“We’d like to place on record our thanks to Lee for all of his efforts during his time at Gloucester City and wish him and his staff all the best for the future.
“Further statements will follow in due course.”