The Yorkshireman guided The Tigers to an eighth-place finish in the group stage but leaves 12 months into his two-year deal
The Tigers finished eighth in the 10-team group phase, collecting just three wins from their nine matches.
Despite prevailing over South Africa, West Indies and Afghanistan, five losses and a no result left just two places off the bottom.
Rhodes, 55, was only 12 months into a contract which was due to expire after next year's T20 World Cup in Australia but has seen the agreement curtailed after a post-tournament review.
"The board had a review following the Pakistan match [Bangladesh's last at the World Cup] in a meeting in London," Nizamuddin Chowdhury, the BCB CEO, told ESPNcricinfo.
"There it was decided that the BCB (Bangladesh Cricket Board) and Steve Rhodes will not continue on their agreement. The separation was by mutual consent.
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"The BCB has not yet decided on a new coach for the Sri Lanka series, which is their next assignment."
Meanwhile, the BCB have confirmed that the team have been given security clearance to play the scheduled three-match one-day international series in Sri Lanka later this month.
A terrorist attack in the region in April had raised concerns over the tour, but necessary provisions have been put in place to ensure the team's safety.
It will come after Bangladesh were forced to abandon their tour of New Zealand in March after shootings on two mosques in Christchurch.
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