Worsfold told the Eagles of his decision on Thursday.
"John realised he didn't have the energy, the passion, the enthusiasm and the motivation to keep going," Eagles chairman Alan Cransberg told reporters in Perth.
Just last Saturday, Worsfold was confident of earning a new two-year deal with the club.
But his team's diabolical end to the year, in which they lost their last three games by a combined 214 points, seems to have brought about Worsfold's downfall.
The Eagles started the year as a premiership fancy, but finished 13th after managing just nine wins.
Worsfold had been coach of West Coast since 2002, leading the club to eight finals campaigns and the 2006 premiership.
He also captained the club to two flags during his glittering 209-match playing career.
Cransberg described Worsfold as a legend of the club and said his contribution would still be remembered in 100 years.
"While it's sad for us, it's obviously an opportunity for us to build the next part of our future," Cransberg said.
"He felt from his point of view, it was the right time to move on and he felt the club was well positioned to put a new coach in place."
Players were notified shortly before the Eagles held Thursday afternoon's media conference.
It appeared to come as a shock, judging by the reaction of ruckman Nic Naitanui.
"Why the hell does the media know before us #aintright #hopeitsnottrue," Naitanui tweeted only minutes before the announcement was made.
Cransberg said the Eagles had not started looking for a replacement coach or sounded out potential candidates.
"That to me would be very disrespectful to John if we were out there shopping around for coaches," he said.
"We had not finished our own board processes when he made his announcement.
"We are right at the start now and we will put together a process.
"I think we got it pretty right last time, we got a coach that was sensational for 12 years, so we'll start that process now and hopefully get just as outstanding a candidate."
While Worsfold is likely to be linked to the vacant Brisbane coaching job, chief executive Trevor Nisbett doubted he would coach anywhere next season.
"I'm not sure what John's thoughts are - he just needs a break," Nisbett said.
"I would doubt that he would coach next year but you never say never in this industry because things may change over the next two months.
"But certainly, I don't think he was in that frame of mind this morning and he's probably not in that frame of mind at the moment."
JOHN WORSFOLD'S KEY STATISTICS IN HIS AFL CAREER AS WEST COAST PLAYER AND COACH.
* Age: 44
* Height: 180cm
* Weight: 86kg
* Games played: 209 (1987-98)
* Goals: 37
* Premierships: 1992, 1994 (both as captain)
* All-Australian: 1988, 1990
* Best and fairest winner: 1988 aged 20 (club record for youngest)
* Games as captain: 138 from 1991 to 1998 (club record)
* Games coached: 281 (club record)
* Coaching record 2002-2013: 149 won, 130 lost, drawn 2
* Winning percentage: 53.38
* Years in finals: eight
* Coaching honours: premiership side 2006, winner of AFL Coaches' Association senior coach of the year award 2006, 2011
* One of eight inaugural inductees to West Coast Hall of Fame in 2011
* One of only two men (along with Geelong's Reg Hickey) to captain and coach premiership teams at the same club.