Ali, who led the UAE to a third-place finish at the Asian Cup in 2015, called time on a highly successful stint in charge of his country in the wake of the 2-0 defeat by the Socceroos in Group B of Asian qualifying.
The loss left the Emiratis, who had started their campaign with a stunning victory away to Japan, fourth in the group and clinging to faint hopes of finishing third and reaching Russia via two playoffs.
Ali said he had offered to resign after the UAE beat Iraq in a qualifier last November but had been persuaded to stay on.
"I think after five years, I have done my best, we have many achievements," he told reporters.
"This is a very bad time for me, I wish I could leave the national team in a better condition. But this is life, we have to accept it.
"I tried my best with all the tools I have. But the coach is only one part of the team.
"I thank the staff, the team but I think it is time for me to leave."
Ali played a key role in the development of the core of the current squad when he led the UAE's under-23 side to the Olympics for the first time at London in 2012.
As well as the run to the semi-finals of the last Asian Cup, the 51-year-old also led the senior team to a Gulf Cup triumph in 2013.
The UAE will host the next Asian Cup in 2019.
(Editing by Ken Ferris)
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