He said: "I think this is the time for someone else to take up the reins. I love being manager of this club but this is a result-based business."
McCall, arguably Bradford's most popular player of modern times, enjoyed two successful spells at the club spanning 12 years before taking over as manager after the Bantams had been relegated from League One.
There were high hopes he would restore their flagging fortunes but they failed to reach the play-offs in his first two seasons and after their latest defeat they find themselves anchored in the bottom half of the table.
McCall, who captained Bradford to promotion to the Premier League in 1999, said: "I have 18 months of my contract left but that is irrelevant - I will do what is best for the club."