Assistant head coach Matt Gray has also left the club.
Former Chelsea youth coach Drummy signed a two-year deal to replace Mark Yates as Reds boss in April 2016.
Crawley, who host Mansfield in their final game of the season on Saturday, are 21st in League Two and seven points clear of the relegation zone.
Drummy, who had no previous managerial experience in the EFL, won 15 of his 54 games in charge of the club.
A club statement said: "The club would like to thank Dermot and Matt for their hard work in the last 13 months and wish them all the best for their future careers."
BBC Sussex & BBC Surrey Crawley commentator John Barnett
"The appointment of Drummy, whose background was as a vastly experienced development coach, was an interesting one, not least in terms of the style of football he had pledged to instil.
"The early signs were promising, with the club reaching fifth place by mid-October and fans clearly appreciative of the brand of football on offer.
"Despite some poor away form, the home record remained strong into February, but once a losing sequence at the Checkatrade Stadium stalled their progress somewhat, the passing game seemed to abate.
"Just three wins since mid-January started to frustrate the supporters, and clearly Turkish owner Ziya Eren, who parts company with a second manager in little over a year.
"Drummy's contribution to matters off the field and the club engaging with its fans should not be overlooked, and some important groundwork and more has been laid in that respect."
Crawley Town have parted company with head coach Dermot Drummy by mutual consent after one year in charge of the League Two club.