A statement from the West Indies Cricket Board (WICB) revealed that it had "mutually agreed" with Gibson to terminate his contract on Tuesday, leaving Richie Richardson in interim charge.
Gibson, a former bowling coach with the England national team, took up his position with the West Indies in January 2010.
The highlight of the 45-year-old's tenure was the triumph at the 2012 ICC World Twenty20.
"On behalf of the [WICB] and West Indies cricket as a whole we express our gratitude to Ottis for his work, particularly in coaching the team to winning the ICC World Twenty20 in 2012, and offer our best wishes to him in all his future endeavours," chief executive Michael Muirhead said in the WICB's statement.
The West Indies are set to play their first of three ODIs versus Bangladesh on Wednesday, while they will also face the sub-continental team in a one-off T20 International and two Tests over the next month.
The Caribbean side have lost their past six matches in all forms of cricket, while they have only won once in 12 fixtures.