West Brom parted company with Steve Clarke on Saturday and Spurs likewise with Andre Villas-Boas earlier today.
The 47-year-old Italian arrived at Vicarage Road in July 2012 and led them to the Championship play-off final last season, losing to Crystal Palace 1-0.
But Watford have lost their last five home games and last won in October. The final straw was the 1-0 defeat to bottom three side Sheffield Wednesday on Saturday - who had themselves sacked their manager - Dave Jones two weeks ago.
"I feel that it's in the best interests of the team that somebody new is given the chance to bring the success we have hoped for," Zola said in a statement.
"It is for a variety of reasons, and not just over one matter or one moment, that I feel this is the right decision for me, in the best interests of the club."
Former Chelsea and Italy striker Zola was brought in shortly after the Italian Pozzo family acquired the club in June 2012.
Zola admitted after Saturday's 1-0 defeat against Sheffield Wednesday at Vicarage Road that he would be considering his future at the club.
The defeat came during a poor run of form that had seen the club drop from fifth to 13th in the Championship.
A club statement said: "It is with great sadness that the board of Watford Football Club has accepted the resignation of head coach Gianfranco Zola.
"Watford FC wishes to place on record its sincere gratitude to Gianfranco for his achievements at Vicarage Road, and for always acting with the utmost dignity and grace.
"The board fully respects his decision and Gianfranco will be welcome at Watford Football Club at any time in the future."