Ashworth joined United on July 1st following a period of gardening leave at Newcastle but has departed after a rocky transition.
The Athletic says an exit was sanctioned after a meeting with chief executive Omar Berrada at Old Trafford following United's 3-2 defeat to Nottingham Forest on Saturday evening.
It is claimed that co-owner Sir Jim Ratcliffe had a key role in discussions which are said to have led to a mutual contract termination.
"Dan Ashworth will be leaving his role as Sporting Director of Manchester United by mutual agreement," a club statement said.
"We would like to thank Dan for his work and support during a transitional period for the club and wish him well for the future."
Ratcliffe had put Ashworth in charge of football performance, recruitment and operations, which led to United spending almost £200 million on recruitments, signing the likes of Leny Yoro, Manuel Ugarte, Matthijs De Ligt, Joshua Zirkzee, and Noussair Mazraoui.
Ashworth also had a role in United handing Erik ten Hag a new contract in the summer, as well as having a voice in the Dutchman's dismissal in October.