The 51-year-old leaves the role after three years having failed to secure qualification for the Euros in 2022 — a home defeat by Finland earlier this month ending their hopes.
Kerr — who also coached Scotland at the Euro 2017 finals where they went out in the group stage — said it was time to confront new challenges.
“I am privileged to have played a part in such an historical moment in Scottish football (reaching the World Cup finals),” she said in a statement.
“That is something that will live with me forever.
“I know the timing is right for me to look ahead to the next chapter, to face new challenges and to create and enjoy more amazing experiences on my journey,” she said in a statement.
Ian Maxwell, SFA chief executive, paid a handsome tribute to Kerr.
He thanked her for her “contribution in leading the team to historic success in qualifying for the Women’s World Cup, and for the dedication and commitment to advancing the women’s game at all levels”.
However, he said the failure to reach the Euro finals had led to an agreement to a parting of the ways.
“This UEFA Euro qualifying campaign ended sooner than we anticipated,” he said.
“We both felt it was the right time for the national team to regroup in time for the World Cup qualifiers, and for Shelley to fulfil her career ambitions with a fresh challenge.”
The 59-times capped defender looked set to take the Scots into the knockout stages of the 2019 World Cup only to let a 3-0 lead over Argentina slip to a 3-3 draw.
Kerr admitted she would “do things differently” after players were reduced to tears at a meeting the day after they were knocked out.
