McClaren resigned from his post following the 3-1 defeat to Birmingham on Sunday afternoon, a result that came soon after a 5-1 loss against Burnley.
A statement issued by the club said, "Nottingham Forest can confirm that Steve McClaren has resigned from his role as manager. He has left the club without compensation, nor will he be seeking any. The club can confirm that the search for a new manager will begin immediately."
McClaren moved to the City Ground in the summer, signing a three year contract after Billy Davies was sacked at the end of the previous season.
Forest now sit in 21st place in the Championship table and fans will be hoping the next boss will have an immediate impact.
Chairman, Nigel Doughty has also offered his resignation. He will leave the position at the end of the season.
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