The 47-year-old leaves with the Terriers seven points adrift of safety at the bottom of the Premier League having won just two of their 22 league games so far this season.
Wagner held talks over his future with the board of directors where it was agreed stepping down was "the correct move for the future of the club."
Speaking about Wagner's departure, Huddersfield Town Chairman Dean Hoyle told the club's official website. “As I had said previously, I had no intention of sacking David this season. Subsequently David – being the great man he is – came to us and made it clear that he needs a break from the rigours of football management.
“We discussed making that change immediately, but he also made it clear that he would give his all for the rest of this season before departing in the summer if we preferred. After a long discussion we all felt that David staying at the Club until the end of the season was best, but we’ve kept discussions open and we all now feel that the time is right to part ways.
“I know the term ‘mutual consent’ is often a byword for the manager being sacked in professional football, but this is a truly joint decision. David has a real, genuine love for this Club and, like me, his foremost concern in our talks has been to establish what is best for Huddersfield Town."
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