According to Cricket Australia, Langer turned down the offer of a short-term extension to his current contract.
The 51-year-old oversaw Australia's 4-0 thrashing of England in this year's Ashes as well as a victory in the 2021 T20 World Cup.
With Chris Silverwood facing the chop for the defeat Down Under, Langer has since been linked with the vacant England position.
In a statement, Cricket Australia said: "The contract extension offered to Justin was the result of a thorough review process that evaluated many factors including future requirements of the team and the upcoming extensive schedule of fixtures.
"The extension was approved by the CA Board and was put to Justin last night. It included the opportunity to defend the T20 World Cup title in Australia at the end of this year."
Langer took the role in May 2018 and his contract was set to expire in June. Andrew McDonald will take over his position on an interim basis.
Nick Hockley, the chief executive of Cricket Australia, praised Langer for his achievements saying: "He has restored the trust in the team and his legacy is assured.
"We are extremely proud of his achievements since he took over in 2018, including the recent T20 World Cup victory and Ashes success."
Langer has been linked with the vacant head coach role with England following Chris Silverwood's departure earlier this week.
Speaking on Friday, interim managing director of England men's cricket Sir Andrew Strauss refused to rule Langer out, saying: "Let's take a step back.
"What are we looking for? Split coaches or one coach and what are the requirements in each of those formats so to speak?
"I know him well and on the surface he's done a very good job with that Australian cricket team so I wouldn't rule him out but I'm sure there are plenty of others as well."