According to L’quipe, the decision follows a disappointing campaign in which Les Verts missed out on an immediate return to Ligue 1 despite significant investment and the retention of key players such as Lucas Stassin and Zuriko Davitashvili.
Saint-Etienne changed managers midway through the season, replacing Erik Horneland with Montanier in a bid to revive their promotion hopes.
Although the former coach guided the team into the promotion play-offs after narrowly missing automatic qualification behind Le Mans, Saint-Etienne fell short against OGC Nice.
After a goalless first leg, they suffered a heavy 4-1 defeat in the return fixture at the Allianz Riviera.
With his contract expiring at the end of the season and no renewal agreed, Montanier’s spell at the club is now coming to an end.