The 43-year-old arrived at Palmerston Park on a one year deal in June last year, but with one game remaining of the campaign both MacPherson and assistant Andy Millen.
Saturday’s 3-1 defeat to Raith Rovers signalled the Doonhamers demise in the First Division.
MacPherson told BBC Scotland: “I had a chat with the board six weeks ago and told them it would be my intention to resign. It’s been a turbulent couple of years for the club, financially.
“We knew the situation when we arrived and we tried our best to get the results to stay in the First Division but it proved extremely difficult.”
A statement on the official club website said that the duo would leave with ‘immediate effect’.
The statement read: “The club, Gus and Andy agreed that it was in the best interests of both parties that we make the change now. The directors of Queen of the South would like to take this opportunity to thank Gus and Andy for all of their efforts in what has been a difficult season for all involved at the club. We wish them well for the future.”