After one win in eight games, culminating in Monday night's 4-1 defeat to Fulham, Holloway hinted he would walk, and it was confirmed at a press conference on Wednesday afternoon.
Holloway brought in 14 players over the summer, something he admitted was a mistake.
He said: "I have pride in the job we've both done. It wasn't easy. If Steve's [Parish] last manager wasn't headhunted I wouldn't have been here.
"I have to hold my hand up and say we didn't keep the spirit that got us up. We changed too much too quickly."
He added: "Someone new coming in now with a tad more experience at this level will have 30 games left."
Holloway and co-chairman Parish moved to deny rumours there had been a falling out - Parish said: "I've enjoyed every minute of working with Ian. He leaves our club with his head held very high.
"Ian's contract at Crystal Palace has come to an end by mutual consent, he felt that a new approach might help keep us in the division."
Holloway said: "The four owners are unique. They are supporters of the club, and seven defeats out of eight is not good enough.
"I'm proud to have been involved with Palace and I wouldn't want to out-wear my welcome."