The news of the 52-year-old's departure comes at the end of a dramatic day at Elland Road which saw the club's ownership issues thrust into the spotlight.
United are in the midst of a takeover, which it is understood will be completed by the Italian Massimo Cellino, and throughout the week it has quickly become apparent that McDermott was not his man.
Cellino, the owner of Serie A side Cagliari, has had a delegation in Leeds for the last week as he prepares to sign off a 75 per cent purchase of the club from Gulf Finance House.
One of his party is the former Middlesbrough defender Gianluca Festa and it is understood that on Tuesday it was asked if Festa could sit in the dugout with McDermott during Leeds' 1-1 draw with Ipswich.
It is thought Festa is Cellino's first choice to replace McDermott but until Friday the chance had not arisen.
But, as it emerged that Cellino was in the driving seat to buy the club after a management buyout by current managing director David Haigh collapsed, McDermott's position looked all the more vulnerable.
McDermott, who joined Leeds in April last year, gave a news conference on Friday afternoon during which he admitted that Saturday's game against Huddersfield could be his last before saying he intended to "enjoy" the occasion.
Cellino's influence has extended beyond the dugout too, with members of his delegation having attended Leeds' Thorp Arch training ground to carry out various checks.
McDermott will no longer be seen there, though, with his departure muddying the waters even further.
Despite Cellino's apparent closeness to completion, a second group, Together Leeds, are still hopeful of buying the club from GFH, who purchased it from Ken Bates in December 2012.
Led by former Manchester United director Mike Farnan and involving former Leeds defender Lucas Radebe, Together Yorkshire bid for Leeds in November but their offer was dismissed as "risible".
In a statement released on Friday, Together Leeds said: "We, led by Mike Farnan, issued an offer for the share capital of Leeds United on the 14th November 2013. The value offered was significantly in excess of the amount publicly reported.
"Our bid remains fully funded, and our strategy involves credible Yorkshire and football people, with Leeds and the community at their heart, rebuilding this great club. We think that our consortium is the best future custodian of the club and represents the best way forward.
"In recent days, before and since the collapse of the Sport Capital bid, we have re-engaged with GFH, and offered significant investment into the club.
"We are hopeful of those discussions being allowed to progress to a successful conclusion.
"We thank everyone for the huge support shown to us, particularly this week."
Cellino, a 57-year-old agricultural entrepreneur, has a chequered background, having previously been convicted of fraud. He is known in Cagliari as 'The King of Corn' and in 2010 was linked with a takeover of West Ham.
Leeds could announce he has bought the club but any takeover would require him to pass the Football League's Fit and Proper Person test which is mandatory for anyone purchasing more than 10 per cent in a club.
There was no comment from the Football League on Friday afternoon.
Another key issue at Leeds has been the future of captain Ross McCormack.
The Scotland international has been a subject of bids from West Ham and Cardiff which were both rejected, with the striker earlier releasing a statement in which he said he was "looking forward to staying at Leeds under Brian McDermott."
He quickly responded to the sacking of the man who gave him the armband, though, by telling Sky Sports News: "The club have decided to sack him unfortunately. He's gone, he called me up earlier and he told me he'd gone.
"It's hard times at the club. I'm absolutely gutted because I had a really close relationship with the manager.
"I was looking forward to continuing to work with Leeds United under Brian McDermott but things have changed. I think a big part of that was Brian McDermott and at the moment it's still very raw."
With regards to his own future in the wake of McDermott's sacking, McCormack added: "There are three hours left so I can't see anything happening, the club have said they are not going to sell me.
"I'm lost for words, I can't believe it. It's the last day of the transfer window, it's incredible."