The decision came as a surprise after the GFF had earlier backed the Swiss coach following the Scorpions' elimination in the preliminary round of Russia 2018 World Cup qualifying in October by Namibia.
Savoy's dismissal was announced at a hastily arranged news conference in Banjul.
"We have a mutual agreement amongst the stakeholders to terminate the services of Raoul," said GFF official Ebou Faye.
"The coach himself has been contacted about this development and hence we want to move on, it is important that we take a different approach," Faye added.
The search for an immediate replacement has begun and it is believed the GFF is not limiting its choice to only a foreign coach.
Savoy, 42, was appointed on 14 May as Peter Bonu Johnson's successor but failed to win any of his five matches in charge.
Savoy lost his last match with The Gambia 2-1 away to Namibia following a frustrating 1-1 draw at home in the preliminary rounds of Russia 2018 World Cup qualifying.
The Gambia Football Federation (GFF) announced on Saturday it had parted ways with coach Raoul Savoy following a string of poor results.