Former Man United and Everton defender Neville, 49, took charge of the MLS side back in November 2023 following his exit from Inter Miami.
It’s been a disappointing start to the 2026 season for the Portland Timbers as they sit in 13th place in the Western Conference standings with 20 matches remaining.
The club and Neville decided to take action as they enter a summer break ahead of the 2026 World Cup.
“In my nearly two decades of owning and operating the Portland Timbers, there are very few people I have enjoyed working with more than Phil Neville,” said Timbers owner Merritt Paulson.
“Phil has outstanding leadership qualities and a boundless sense of positivity even in the face of adversity.
“I cannot thank Phil enough for his tireless dedication to this club and the Portland community, which he and his family truly embraced.”