The Swiss, who had taken over in 2018 after arriving from France’s Nice, was seen as the ideal candidate to break Bayern Munich’s stranglehold on the Bundesliga title.
But in his 2-1/2 seasons in charge he failed to win a German league or Cup title, and Saturday’s defeat was the heaviest since his arrival.
"We are all grateful to Lucien Favre for his excellent work over the past 2-1/2 years, in which he and his team won two runner-up championships. As a professional and as a person, Lucien Favre is beyond any doubt," Dortmund chairman Hans-Joachim Watzke said.
Nicknamed “the brain” for his tactical nous, Favre, who previously worked at Hertha Berlin and Borussia Moenchenglabdach in the Bundesliga, had enjoyed a stellar first half of the 2018/19 season with Dortmund leading the title race before imploding after the winter break to see the league title go again to Munich.