Powell had been in the job for 15 years, having taken up the role in 1998, and she guided England to a runners-up spot at the 2009 UEFA European Championship. However, England went out in the first round of this year's competition and the FA said it was time "for a fresh outlook".
FA General Secretary Alex Horne said: "Hope deserves a lot of credit for her commitment to developing the national teams over such a long period. The high point was undoubtedly reaching the UEFA European Championship final four years ago.
"However, after the disappointment of the recent tournament in Sweden, the Club England Board believe the time is right to make a change and for a fresh outlook. I'd like to place on record the organisation's thanks to Hope for her efforts and wish her every success in the future.
"Hope will always be welcome back at Wembley Stadium and St.George's Park and she leaves a strong legacy, having helped The FA build the women's game to the strong position it is in today."
The statement continued: "It is important we continue this development at major tournaments so we can compete, with Germany, France, Spain and the Nordic countries in Europe in addition to the likes of Japan, Brazil, USA and Canada at the 2015 FIFA World Cup.
"We will now look to recruit a new Head Coach and a Technical lead for women's football who will report to Dan Ashworth. We will be speaking to people from across the game both domestically and internationally before making any appointments."