The 46-year-old, absent from Plainmoor on sick leave because of a stress-related illness since January, was expecting to take the helm again ahead of the 2013/14 League Two campaign.
But a club statement on Monday afternoon confirmed his two-season stay with the Gulls was over because of footballing reasons.
He told BBC South West Sport: "I was amazed to receive a phone call from Thea Bristow (the Torquay chairwoman) at 7.30 on Sunday night to say that my contract with the club was being terminated after all the assurances during my illness and full recovery that I would be returning as manager of Torquay."
Ling's last match in charge of Torquay was a 1-1 draw with Exeter in mid-January and in his absence assistant Shaun Taylor and then interim manager Alan Knill helped the Gulls survive.
Since the news was broken a number of Torquay players have taken to Twitter to give their views on the news.
Gulls midfielder Craig Easton said: "Disappointed to hear about the Gaffer. It was great to get the opportunity to work with him again this season, so much to thank him for.
"He took a 'punt' on me when no one else wanted to touch me. I wish him all the best for the future. I'm sure he will be successful again."
Player of the year Aaron Downes said: "Just heard the news. Want to put on record how much I appreciate everything Martin has done for me."