Ferguson's future had been in doubt since the weekend defeat at Newcastle United, with the London Road club finally releasing a statement to confirm the Scotsman's departure.
A statement on the club's official website read: "Following a series of meetings with the manager, Peterborough United and Darren Ferguson have decided to part company with immediate effect by mutual consent.
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"The football club would like to thank Darren for his magnificent service during his time at London Road and wish him and his family all the best for the future.
"Peterborough United Football Club wish to assure all its supporters that the perceived delay in announcing the departure of the manager by mutual consent was entirely due to the confidential terms and conditions that underpinned the agreement which was not approved and finalised until this afternoon."
Director of football Barry Fry had earlier told the Evening Telegraph: "Nothing surprises me in football.
"I and the club would like to thank him for his miraculous achievements with the total support of the chairman in the near three years he has been at the club and we wish him and his family all the best in the future."
Ferguson took charge at London Road in January 2007 and led the club to back-to-back promotions from League Two to the Championship.
Last season they finished second in League One behind Leicester City, having finished second in League Two the previous campaign behind MK Dons.
Source: DSG
