Donovan, who took over in 2013 after the Sun fired Mike Thibault, was a combined 38-64 at Connecticut and never made the playoffs.
The Sun was 15-19 during an injury-plagued 2015 season. The team lost several key players, including star Chiney Ogwumike who underwent surgery on her right knee in January and missed the entire campaign.
Donovan says it wasn't easy to walk away, but she felt the time was right.
The move comes the same day the league named Sun post player Kelsey Bone as its Most Improved Player.
Sun General Manager Chris Sienko says the club will immediately begin searching for Donovan's replacement.