Italiano managed 80 games in charge of the Phoenix and had a contract due to expire at the end of this season.
The Phoenix fell to a 4-0 half-time deficit at home to Auckland FC, prompting Italiano to bench starting goalkeeper Josh Oluwayemi at the half-time break after he rated 3.8 out of 10 on the Flashscore player rating system for a dreadful performance that included a howler of an own goal.
Italiano took full responsibility for the Nix's disastrous season, which has them sitting in tenth position and four points off the top-six at time of writing.
“To lose 5-0 at home with the season still to play for is unacceptable and I take full responsibility, so I’ve told the club I’ve tendered my resignation,” Italiano said at a press conference.
“It’s easier for someone with new energy to come in and refocus the group.
“It was clearly evident what went wrong today. We conceded three very sloppy goals but it was more the mentality shift. Once we conceded that first one we got quite rattled and that’s probably something that is symbolic of the team this season.
“In big moments there are big errors that are costing us and that could be down to inexperience, the older players or the younger players not fully focusing – but that comes down to me at the end of the day.
“I do all the training, I provide the environment and even today, irrespective if Josh (Oluwayemi) made some errors in goal, it was me who picked him so it ultimately falls to me.”