Dickov had been under the spotlight after a wretched run in League One but looked to have bought himself some breathing space with last week's eye-catching 3-2 FA Cup win over Liverpool.
However, progress to the fifth round - and a home tie against Everton - has not proved to be sufficient to extend his three-year tenure.
A club statement read: "After yesterday's defeat to Walsall, Paul Dickov has decided that for the good of Oldham Athletic, it is best that he steps aside.
"Following the memorable wins against Nottingham Forest and Liverpool, when the squad proved what they were capable of, Paul had hoped these would be the catalyst to improved league results, but this has proved not to be the case.
"He has been disappointed at the level of commitment and performances and feels that a change is needed if the club is to survive in League One."
Chairman Simon Corney admitted that he had sympathy for the manager's plight and felt the blame lay with the playing squad.
"I feel for Paul, I really do, because he trains them hard, he works hard and does a lot of things to prepare the team, and once they cross that line, what can he do?" he said.
"But I can't let anything like that cloud my judgement because I have to do what is best for the club.
"I'd like to think I will never have another manager who is a friend of mine again, because it is horrible."
Oldham are currently 20th in the standings - after eight defeats out of nine games - one point, and one place clear of the four relegation slots.