Gary O'Neil (right) secured Premier League survival with Bournemouth last seasonWolves boss Julen Lopetegui has left the club, with ex-Bournemouth manager Gary O'Neil set to replace him.
The club have known for some time that Lopetegui, 56, wanted to leave.
Wolves said both parties had "accepted their differences of opinion on certain issues and agreed that an amicable end to his contract was the best solution".
Wolves announced the Spaniard's departure three days before the Premier League season begins - they face Manchester United on Monday.
The club said talks had been "ongoing in recent weeks, held with the utmost respect and cordiality" to give the club time to work on finding a successor and allow Lopetegui and his staff to get the squad in good shape for the new season.
BBC Sport's Simon Stone understands the agreement to part ways was sealed after the friendly with Celtic last month, but that Lopetegui agreed to continue to allow time to find a replacement.
Several candidates were considered as Lopetegui's replacement but 40-year-old O'Neil impressed the hierarchy and is expected to be confirmed as the new manager on Wednesday.
O'Neil guided Bournemouth to Premier League safety last season with a 15th-place finish but was sacked in June and replaced by Andoni Iraola, who led Spanish side Rayo Vallecano to 11th in La Liga last season.
Spanish journalist Guillem Balague said Lopetegui was not allowed to sign any players this summer, after believing the squad would be strengthened.
Former Spain boss Lopetegui took over in November when Wolves were bottom of the Premier League table before guiding them to 13th place, but the club's financial situation led to speculation earlier this summer that he could leave.
In an open letter to fans, chairman Jeff Shi said the club's Chinese owners, Fosun, have no intention of selling the club but stressed that Wolves must be cautious with their summer spending in order to meet the Premier League's financial fair play rules.
According to FFP rules, the club must make a profit on player trading this summer to avoid exceeding the accumulated £105m loss over a three-year period, the maximum permitted.
They sold captain Ruben Neves to Saudi Arabian side Al-Hilal for a club record £47m in June and also allowed Mexican striker Raul Jimenez join Fulham for £5m last month, with the only notable incoming signing being Republic of Ireland full-back Matt Doherty's return as a free agent in July.
Sporting director Matt Hobbs thanked "Julen and his staff for their dedication", adding: "While our ambition had been to move into the new season together, it is public knowledge that there were differences of opinion on some key topics, and it was agreed by all parties that it would be best to part ways ahead of the new campaign.
"After a successful pre-season, full of hard work and good performances, Julen and his staff leave the squad in great shape ahead of the season opener next week, which will give his successor the best possible platform for success."
Lopetegui's six-man backroom team has also left the club.
The Spanish manager said: "I wish Wolves and everybody at the club the very best of luck for the future, and thank them for the opportunity granted at the time to take charge of this wonderful club."
He thanked the players, board and staff and said: "It has been an honour to enjoy this adventure."
'Wolves have twice moved the goalposts' - Balague
Guillem Balague, Spanish football expert
Lopetegui told me a few days back that when he first arrived the club had told him that, if he managed to save Wolves from relegation last season, he would be able to sign players, not the most expensive ones, but young and talented players. It was an exciting prospect.
At the end of the season he was told this was not the case, but he could recruit players on free transfers. He had to consider his position but finally accepted that was the new target and challenge.
Then, as is public after the club wrote a statement, he was told that even this was not possible and that he could sign nobody.
Lopetegui's frustration results from the fact that he believes Wolves bosses moved the goalposts twice.
This is a manager who has coached Spain and Real Madrid, and won a European title for Sevilla.
He thought being in the Premier League was the next step to take in that stellar career but feels the club has gone backwards.
He told me in the interview that he had absolutely no problem with those that run the club day to day.
But I have the impression that the people who take the final decisions at Wolves were not telling him the full picture.
Obviously it is now a project for another manager.
Lopetegui believes Wolves haven't taken full advantage of what he brings and haven't given him the opportunity to use his talent, contacts and worth to improve the squad, and make Wolves a regular top-10 club with hopes of Europe, which is what he was told when he chose to leave a personal situation behind to manage them.
Wolves have had time to look for a replacement as I am sure conversations about his future have taken place for a while.
Lopetegui managed to prepare the team in a solid pre-season, but one that has shown also an alarming lack of depth.
