Despite signing a new contract until the end of the 2026-27 season in January, Rudan said on Thursday he would step down with immediate effect.
The Wanderers coach said the return of his mother's brain cancer had prompted him to make the call, following one of the most turbulent seasons in his time in charge of the club.
"Unfortunately, due to personal circumstances, I need to end my association with the club," Rudan said in a statement.
"The club is in a healthy position, although we fell short of playing in the finals this season, I am proud of all the hard work by the players, support staff and executive of the club.
"I will be spending my time in the near future being close to my family as we are going through a difficult time as my mother's brain cancer has come back."
Rudan and the Wanderers had entered the current ALM campaign with high expectations but missed the finals after their form nosedived in the back end of a turbulent season.
Pressure had built on Rudan, who notably failed to front his post-match press conference after Western Sydney suffered a 7-0 thrashing from Melbourne City at AAMI Park in March.
Marko Rudan is no longer coach of Western Sydney Wanderers after a trying season.
There were rumours of player unrest while last month Rudan apologised after he singled out youngster Marcus Younis for blame following the Wanderers' derby loss to Sydney FC.
In February, Rudan was banned for two games, with another suspended, for his verbal attack on referee Adam Kersey.
Former Wellington and Western United coach Rudan joined the Wanderers in January 2022 and led the club in 71 ALM games (W26, D18, L27), including ending a six-year finals drought last season.
"Marko has demonstrated complete dedication to the role in his time here, culminating in him leading us to a finals campaign last season after many years in the wilderness," Wanderers chief executive Scott Hudson said in a statement.
"We thank Marko for his efforts and wish him, and his family, all the best for the future."
Western Sydney have not announced a replacement for Rudan.
But the Wanderers could make a move for championship-winning former Central Coast Mariners coach Nick Montgomery, who has just been sacked by Scottish club Hibernian.
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