Davids, who won the Champions League with Ajax Amsterdam in 1995, managed the homely London club since joining in 2012 but could not stop relegation from the Football League last season.
The 40-year-old continued to play for the side this term in the Conference (fifth tier), although threatened to hang up his boots after a fifth red card in Barnet's colours in December.
"Everybody associated with the club would like to thank Edgar for his contribution during his time here and for his help in putting together the current team structure," said a statement on the club website (www.barnetfc.com).
"The club would also like to wish Edgar the very best of luck in what we have no doubt will be the continuation of an illustrious career."
(Reporting by Martyn Herman; Editing by Ken Ferris)
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