Rangers confirmed Green has left his role as club consultant with immediate effect in a statement to the London Stock Exchange.
The news has been greeted with delight by Rangers fans, many of whom saw the Yorkshireman as a disruptive influence at Ibrox.
The club's board is meeting today and had been due to discuss sacking Green from the post, to which he was only appointed on August 2.
But he has now decided to go before he was pushed and has promised Rangers investor Sandy Easdale first refusal on his 7.7% stake in the club.
The club's stock exchange statement read: "Following today's Board meeting a discussion was held between CEO Craig Mather and Charles Green.
"The result of those discussions is that the consultancy agreement between Rangers and Mr Green has today been terminated by the Company with immediate effect."
In a statement Jack Irvine, spokesman for the Easdale family, said: "Charles Green has given first refusal of his shares to Sandy Easdale as he promised. Sandy may take all or some of the shareholding depending on the strategic requirements of other potential investors. "
Green led the £5.5million purchase of the club's business and assets by a consortium of investors after it was liquidated last summer and reformed the former Scottish champions as a newco in the Third Division.
But following an outspoken spell as chief executive, he resigned in April amid allegations of links to former Rangers owner Craig Whyte and anger over alleged racist comments made about former club director Imran Ahmad - a statement for which he was fined by the Scottish Football Association.
It was Whyte who set Rangers on the path to liquidation when he put them into administration 18 months ago, but an independent investigation ordered by the club's board found he had not invested in the current Rangers set-up.
Green returned to the club three weeks ago on a £1,000-a-month retainer in order to placate some of the club's investors after Rangers' share price dropped to just 41p.
But he quickly faced fresh anger after telling boss Ally McCoist he would have a "problem" if he failed to lead the team to a domestic cup win while also backing a £3.4million legal bid launched by Ahmad against the Glasgow side after he too was forced out of the club.
McCoist responded by branding Green an "embarrassment" to Rangers.
Current chief executive Craig Mathers - who faces being removed from the board himself along with Brian Stockbridge and Bryan Smart and replaced by Paul Murray and Frank Blin after a group of shareholders called for an extraordinary general meeting - told fans at a meeting earlier this month that he would call a meeting of directors where a plan to sack Green would be voted on.
But Green has now decided to go of his own volition.
His decision comes 24 hours after three Rangers supporters groups - The Rangers Supporters Assembly, The Rangers Supporters Association and The Rangers Supporters Trust - issued a joint statement telling the current board that they wanted Green out.
Mark Dingwall of the Rangers Supporters Trust said today: "I am delighted that Mr Green is moving on.
"The chaos of the last few month has almost entirely been down to him and his colleagues behaviour.
"It has not been good for the club and I hope that the process of 'cleansing' that Ally McCoist referred to can now continue to sweep all of the bad elements out of Rangers.
"We want a healthy and vibrant club to support once again.
"I take my hat off to Mr Green for raising £22million in the IPO for a Third Division club in the weeks before Christmas.
"However, the baggage that he has brought to Rangers in the last few months has been extremely bad for the club.
"I am glad that he has stepped down from his position and is set to sell his shareholding."
Green will not be allowed to sell his shares until December under Stock Exchange rules, but has already struck a separate deal to transfer 714,285 shares to Isle-of-Man registered hedge fund Laxey Partners Limited.
Businessman James Easdale - brother of Sandy - meanwhile, has already been appointed to the Rangers board as a non-executive director of the company.
Easdale, who is described on the club's website as ''an entrepreneur and a director of several businesses'', has a business empire which includes McGill's Bus Service Limited.