The move comes amid an ongoing six-game losing streak for the Lions, who posted a 21-29-14 record under Kreis and are 6-8-1 this season.
Assistant coach Bobby Murphy will lead the team while the club searches for a new head coach.
"This is a very difficult decision to take, but sometimes in sports we must make tough decisions with the best future of the organization in mind,” Orlando City SC CEO Alex Leitao said in a team statement. “I have enormous respect for Jason and the work his team did in Orlando. He arrived in a difficult moment and is leaving with a legacy of respect and professionalism. Now is the time to look forward, keep our heads high and continue pushing toward the many goals we set this season."
Assistant coaches CJ Brown and Miles Joseph have also left Orlando by mutual consent.
Kreis joined Orlando in July 2016, halfway through the club's second year in Major League Soccer, posting a 5-6-4 record after he took over from Adrian Heath. In 2017, they went 10-15-9, finishing 10th place in the Eastern Conference.
Though 2018 started promisingly for the Lions as they rattled off a six-game win streak following an 0-2-1 start, but the team has since dropped home results to Eastern Conference rivals Atlanta and Chicago, and on Wednesday lost 3-0 in a trip to the struggling Montreal Impact.