Cushing departs the Major League Soccer (MLS) side after they crashed out of the semi-finals in the Eastern Conference playoffs to bitter crosstown rivals New York Red Bulls.
"After being appointed as Head Coach for the 2023 season, Nick built a collaborative, high-performance environment at the training facility that has allowed us to continue to evolve as an organisation," New York City FC sporting director David Lee said.
"Whilst we are incredibly appreciative for all he has done for the Club, at this current time, we believe it's best to move the team in a new direction as we plan for the 2025 season and beyond.
"We would like to sincerely thank Nick for his contributions and wish him and his family all the very best in their future endeavours."
With Cushing now a free agent, it puts him in the box seat to take over at Arsenal Women, who have not found a replacement since Jonas Eidevall's surprise resignation on October 15.
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Eidevall moved to the Emirates from Swedish side FC Rosengard in June 2021 but could not lead the Gunners to a Women's Super League title.
Cushing may be the man to reverse Arsenal Women's fortunes based on his achievements during his stint at Manchester City Women.
Across his near-seven-year-stint, Cushing led City Women to a Women's Super League title, an FA Women's Cup and two FA Women's League Cups.
Cushing previously quashed any talk of taking over at Arsenal Women earlier in November, but now that he has been sacked by New York City FC, his tune may change.
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"The whole story is news to me," Cushing said on November 8.
Cushing added: "There has been no contact from anybody outside their organisation with myself."
Earlier in November, the Gunners confirmed interim boss Renee Slegers would remain in her role until December.
Since Slegers took charge on a temporary basis, Arsenal have won six of their last seven and booked a spot in the Women's Champions League quarter-finals.
More to follow...