The departure of the former World Cup striker was announced after a meeting of the Senegal Football Federation in Dakar on Tuesday.
After a dominant display in qualifying, Senegal went into the Nations Cup in Equatorial Guinea and Gabon as one of the favourites.
However, they suffered arguably the biggest shock in the history of the tournament when they lost to Equatorial Guinea, ranked some 100 places below them.
They were also beaten by Zambia and Libya in their matches at Bata and were the first side eliminated.
"The responsibility of the coach for these results is incontestable," the federation said in a statement afterwards.
Karim Sega and Aliou Cisse were named caretaker coaches for Senegal's friendly against South Africa in Durban on February 29.