Coppell, 55, took charge at Ashton Gate in June and lead a summer of recruitment - the highest-profile being the capture of David James, who was England's no.1 during the World Cup in South Africa.
Coppell's two games brought defeats - a 3-0 home loss to Millwall in the Championship and 3-2 Carling Cup first round exit at Southend - and he has decided he no longer has the motivation to work in management.
"It has become clear over recent weeks, that I found I could not, for whatever reason, become passionate about the role and give the commitment the position demands," he said.
"I appreciate that the timing of my departure is not ideal, but I believe it is best for the club to appoint a new manager or indeed appoint Keith Millen, who has a deep knowledge of the club and the squad, at this stage of the season. That individual can then make decisions on signing players before the window closes and work with the squad for the full campaign.
"I am retiring from football management but still feel I have a contribution to make to the game sometime in the future. I would like to sincerely thank the chairman and the board for their understanding and I wish the club and its supporters every success."
The Robins took Coppell's advice, promoting his assistant Millen to manager on a three-year contract.
"I knew I wanted to do the job and last season I enjoyed it. For certain reasons I decided to step aside from it and I was looking forward to working with Steve," said Millen.
"I did enjoy working with him and we are still friends. We met last night, when he told me the news. He apologised for leaving me in this situation. You have to be your own man and go with your decisions. The players know, certainly from last year, how I like things working."