The 50-year-old Norwegian guided Celtic to Scottish Premiership titles in 2015 and 2016 and directed New York City FC to the 2021 MLS Cup crown.
Deila came to Atlanta after leaving Abu Dhabi side Al Wahda last December.
Atlanta closed with a 1-1 draw against Eastern Conference cellar-dwellers DC United, which allowed Atlanta to avoid the bottom of the table.
"It was evident that our standard of play was not met this season, and together with our senior leadership team, we have decided that it was in Atlanta United's best interest to move the team in a different direction," team chief executive officer and president Garth Lagerwey said.
"Ultimately, we owe our fans a much better on-field product, and it is our unwavering commitment to provide that to this community as soon as possible."
Atlanta United had hoped for better when the season began after obtaining midfielder Miguel Almiron from English Premier League side Newcastle United, but the club won only once over its final 18 matches.