The Cyprus FA said in a statement on Thursday that both sides had reached an "amicable arrangement" for the Greek to leave immediately.
Nioplias, who was appointed in mid-2011, is leaving two months before his contract expires in November. He quit after Cyprus lost 2-0 to Slovenia in a World Cup Group E qualifier in Nicosia on Tuesday.
Cyprus have just four points after losing six of eight fixtures. Their next game is away against Iceland on October 11 and Albania at home on October 15.
An interim coaching team will assume duties until the end of Cyprus's qualifying round commitments, the FA said.