His assistant of six years, Dave Smith, will now take on the role of manager.
A statement on the club’s Twitter account said: “Marcus informed us on Tuesday morning that he has decided to step down with immediate effect and put into place the progression plan we have always worked on as a club.
“As much as we didn’t want this to happen as soon it has, we respect Marcus’s decision and with his help over the last few days, we have put everything into place to hand the reigns of the first team over to Dave Smith.
“Marcus has done an absolutely incredible job, reaching the final of the FA Vase with that memorable day out at Wembley, winning the NCEL Division 1, NCEL Premier Division and League Cup double and steering us to our highest ever league position last year.
“Marcus isn’t going anywhere and will be around on matchdays, at club functions and has said if you ever want to come and say hello he is always glad to have a chat and of course you can buy him a pint for the success he has brought to us.
“Marcus has said now is the time to get behind Dave and his team and drive us onto the next exciting chapter in the club’s young history."
The Owls currently sit bottom of the EVO-STIK League East Division table with just one win from 10 league games so far.
They host Marske United in the FA Trophy on Saturday.
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