The decision was reached by mutual consent with the RFU following its review into the team's disappointing performance.
Lancaster, who was appointed to the role in 2012, said he was "extremely saddened to finish the way we did in this World Cup and to step down from the role".
The 46-year-old said he took responsibility for the team's failure but decided to remain in the role while the RFU conducted its review.
"The reality is that, while many aspects of the review were very positive, we didn’t achieve success on the field when it mattered and we all have to take responsibility for that but me especially as head coach," said Lancaster.
“I took on the role in difficult circumstances and it has been a huge challenge to transition the team with many hurdles along the way. However, I am immensely proud of the development of this team and I know that there is an incredibly strong foundation for them to progress to great things in the future. We have played some excellent rugby and it was always going to be tough to get the right level of experience into them in time for 2015.
"It is a young group of players with the huge majority available for the Rugby World Cup in Japan in 2019, where I believe their recent experience will make them genuine contenders.”
RFU chief executive Ian Ritchie will immediately begin the search for Lancaster's replacement, with reports in Australia recently linking Wallabies head coach Michael Cheika with the role.
Ritchie thanked Lancaster for his efforts and said despite the World Cup results had "much to be proud of" including embedding a group of young players into the national set up.
Ritchie said: "The Rugby World Cup was hugely disappointing for everyone associated with the England team and the subsequent review into the team’s performance was always intended to be extremely comprehensive, which it has been. Stuart has been fully involved and has given feedback as well as the other coaches, players, management and a wide variety of people from around the game.
"Following the review, Stuart and I met, where we agreed that he should step down as head coach."