The Newbridge native steps down from the role after two years in charge.
The announcement follows Derry’s defeat to Laois in their All-Ireland second-round qualifier at Owenbeg in June.
Derry failed to win an Ulster Championship game under McErlain, losing to Donegal and Tyrone in 2018 and 2019.
“I have decided to step down as Derry Senior Manager after my two years in charge,” McErlain said today.
“The rationale is very much based on personal circumstances and it’s with disappointment that I won’t be finishing my three-year term.
“After five years in total in Owenbeg it’s been a big shift with some great memories and challenges in equal measure, but I now have to focus on prioritising myself and my family.”
McErlain succeeded Damian Barton in August 2017 after an impressive spell in charge of the Oak Leaf Minors, which included leading the county to the All-Ireland final, where they lost to Kerry.
Derry fell to Donegal in the Ulster Championship quarter-final in 2018 before losing their preliminary round fixture against Tyrone this year.
They beat Wexford emphatically 4-16 to 0-10 in their first-round All-Ireland qualifier, but their progress was halted with defeat to Laois.
In a statement, Doire GAA said: “We would like to sincerely thank Damian, his management and backroom teams, and all our players for their efforts over the past two years.
“We would like to wish Damian, his wife Sinead and family every health and happiness going forward.”