Arena made the decision after talking with Red Bulls manager director Marc de Grandpre.

"Marc and I discussed the direction of the team and decided mutually that this was the best move for Red Bull New York," Arena said in a statement. "I wish the organization the best of luck going forward."

When reached by The Associated Press, Arena said he was not commenting further on the resignation.

Arena led the team to a 12-11-7 record and third place in the Eastern Conference. The Red Bulls were eliminated on Saturday in the playoffs by the New England Revolution, losing 1-0 in a two-game aggregate goal series.

Arena compiled a 16-16-10 regular-season record with the Red Bulls. He made his coaching debut on August 12, 2006, in a friendly against UEFA Champions League winner FC Barcelona. His MLS debut with the team was four days later against D.C. United.

He posted a 4-5-3 record in 2006 after replacing interim coach Richie Williams, who took over when Mo Johnston was fired. However, the team was eliminated by D.C. United in the opening round of the MLS playoffs.

"I met with Bruce this morning to discuss the team and we decided it was in the best interests of the organization to part ways," de Grandpre said. "We made progress this season, but it was not where we wanted to be."

Arena was hired as the U.S. coach in late 1998 after a successful career as a college and MLS coach. He led the U.S. team to the quarterfinals of the 2002 World Cup, its best performance since 1930.

But with raised expectations, the Americans were eliminated from a tough first-round group in the 2006 World Cup and played poorly. Arena's contract was not renewed by U.S. Soccer.

In 130 games with the national team, Arena was 71-30-29. Before that, he won or shared five NCAA titles as coach of Virginia and won two MLS championships and the CONCACAF Champions Cup with D.C. United.

Arena's departure means more instability for the Red Bulls, a team that has had 10 coaches in 12 seasons and hasn't advanced beyond the first round of the playoffs since 2000.

"I understand there's been numerous coaches in this franchise's history. I've only been responsible for one," de Grandpre said. "Stability is important, but with the amount of resources we've committed, we expect results quickly. Bruce was responsible for the entire soccer operation from soup to nuts, and we obviously didn't achieve what we wanted to this year."

On Sunday, Los Angeles Galaxy star David Beckham said Frank Yallop resigned as head coach.