The former Aston Villa boss has not taken charge of the Reds in 2015 having stepped down from his position to undergo major open heart surgery in December.
Interim manager Dean Saunders failed to keep Crawley in League One and they were relegated on the final day.
And on Saturday morning an official club statement revealed they have reached an agreement with 60-year-old Gregory, who will now leave with immediate effect.
"Thankfully, John is now on the road to a full recovery and the board of directors would like to place on record their sincere thanks to John for his efforts during his time in charge and his continued support of the club during his recent illness," it read
"He will always be a welcome visitor to the Checkatrade.com Stadium."
Gregory added: "I would just like to take the opportunity to thank everyone at Crawley Town FC for their support over the last 18 months.
"Unfortunately I did not get the results on the field this season that I managed to get during the second half of 2013-14
Dean Saunders inherited the difficult task of trying to rescue our season with 24 games to go in January of this year.
"I would like to thank the board of directors, in particular, for standing by me and supporting me during the very difficult time I endured whilst undergoing open heart surgery.
"It was brilliant to see the stadium full for the last match of the season
I hope that the Crawley Town fans stand by their team and help to bring back the glory days again very soon."
Source : PA
Source: PA