McClaren held talks with president Joop Munsterman over the weekend but the manager failed to receive the assurances for which he had hoped and has today taken the decision to leave his role.
The split comes after Saturday's 2-1 league defeat at Heerenveen left Twente - who won the title under McClaren in 2010 - in fifth place in the Eredivisie.
The 51-year-old, who was in his second spell in charge at the Stadium De Grolsch Veste, said in a statement: "After the defeat to Heerenveen on Saturday, I met the President on Sunday.
"We tried to find a solution to the difficult period the team has endured over the last four weeks.
"We discussed the expectations of the club, how European qualification was key each season and finishing in the top four.
"Despite being joint-top at the winter break and even second four weeks ago, recent results and performances have seen major criticism, protest and demonstration from the supporters and the media.
"We talked about how we could change the situation and relieve the pressure on the team which has clearly affected its performance.
"Unfortunately, Saturday's result has seen further adverse reactions and with two home games coming up, we feel the team needs the support and backing from the supporters.
"I also needed assurances about my position now and in the future, which I appreciate in the present situation is difficult.
"After much discussion and deliberation, those assurances weren't forthcoming and we have agreed it's in the best interest of the club going forward that I leave.
"The club is bigger than any one individual and Twente is too big in my heart to stand in the way of its progress."
McClaren leaves with Twente only a point adrift of Vitesse Arnhem in fourth place and a further five behind leaders PSV Eindhoven.
However, they have not tasted victory since a 3-0 win at AZ Alkmaar on December 21, a run of six games either side of the mid-season break which has seen them collect just four points from a possible 18.
McClaren added: "I leave with the team with 10 games to go, still able to achieve its expectations of a top-four finish, which I am positive they will do.
"I leave a proud man to have managed Twente. It has brought me many good memories and one of the greatest days in my career when winning the title in 2010.
"The support received from the club, staff, players and fans has always been much appreciated and I leave sad and disappointed it has ended in these circumstances, but wish the staff and the team success in the future."
Twente chairman Munsterman revealed the decision to quit the club rested with McClaren and he was disappointed to see the Englishman leave.
Munsterman said in a statement on the club's official website: "We believe that the disappointing performance of FC Twente under Steve McClaren could be reversed.
"Steve has however indicated that it is in the interest of everyone to leave the club immediately.
"We understand his decision and respect it. It is disappointing to say goodbye to the trainer under whose leadership FC Twente won the league title in 2010."
Munsterman also confirmed the team will be led by trainer Alfred Schreuder and assisted by the technical team of Boudewijn Pahlplatz and Youri Mulder.
Twente captain Wout Brama said McClaren's departure had come as a huge surprise to the team when they were told the news.
He said: "This morning at training, we as a group of players were informed of the departure of Steve McClaren. The current situation has made McClaren decide to leave.
"The departure comes unexpectedly, for us anyway. I respect the decision of McClaren. As a group of players we must continue and it is clear that we need good results."
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