After 11 victories in 25 Tests - including two humiliating defeats to New Zealand - there had been increasing media speculation that Coetzee faced the sack.
"First and foremost we had to assess what is in the best interests of the Springboks," said Jurie Roux, head of SA Rugby. "We'd like to thank Allister for his passion and dedication to the Springbok cause and wish him every success in his next role."
Coetzee, who was only the second black coach of the national squad, took over from Heyneke Meyer in April 2016 after turning the Cape Town based Western Stormers into one of the most sucessful sides in South African rugby.
But his first game in charge of the national squad in June 2016 ended in defeat to Ireland, a team that had never won in South Africa.
From that Cape Town loss, South Africa recovered win in Johannesburg and Port Elizabeth to claim the three Test series 2-1.
But the doubt had been injected especially with Coetzee's insistence that South Africa move away from kick-and-chase approach for the ball-in-hand ways of New Zealand.
But his vision failed to woo enough supporters and in a letter to SA Rugby,which was leaked to the media, Coetzee claimed that officials had been trying to undermine him since his appointment.
"This creates a public impression of incompetence on my part while wilfully obstructing my efforts to be successful. I will fight to protect my hard-earned reputation."
With the schism in the full glare of the public, his departure appeared to be a matter of arranging the vocabulary.
"I have always held Springbok rugby dear to my heart and will continue to do so and for that reason I think now is the time the team and me strike out in new directions," he said on Friday in a statement. "I wish Springbok rugby every success in the future as I have always done."
Unfortunately for Coetzee the statistics did not support him. Though his sides won seven Tests in 2017, six came against an underperforming France - who have also replaced their head coach - and Argentina. Among four losses were a 57-0 drubbing in New Zealand, a 38-3 thrashing in Ireland, and a 24-22 loss to a Wales team missing several key players.South Africa did not win a Test against a team ranked higher in the world.