Shiels quit after being summoned to crisis talks following his side’s 10-2 humiliation by Hamilton Accies at the weekend.
He had been given a vote of confidence as recently as last week, when chairman Douglas Rae confirmed the 58-year-old would remain in charge for the club’s assault on League One next term.
However, the staggering way in which his side surrendered to Accies on Saturday prompted the Ton board to reconvene this morning and reassess that decision.
It is believed that Shiels stood down from his position during the summit talks.
Morton director Crawford Rae tonight confirmed that the Northern Irishman had left the club but made no further comment.
A statement is expected to come from Cappielow later this evening.
Shiels was officially unveiled as Allan Moore’s successor on 16 December last year but failed to engineer a turnaround in struggling Ton’s fortunes.
They were officially relegated from the Championship on 12 April after a meek 2-0 loss at Alloa.
All in, the former Kilmarnock boss spent less than five months in the Cappielow hotseat. He oversaw four wins, five draws and 11 defeats in 20 matches – a 20 per cent win rate.
The hunt will now begin for what will be the third permanent Morton manager in the space of just six months.