Moody, who worked for boss Malky Mackay during his time at Watford before making the switch to Cardiff with him in 2011, had been suspended and replaced by Kazakh Alisher Apsalyamov, whose previous role at the club was in a work experience capacity.
The club did however pledge their support for Mackay, who is widely regarded as being one of the better young British coaches after guiding Cardiff to promotion, having previously impressed with Watford.
"Iain is leaving the club with our thanks for his contribution," the club said in a statement.
"In the interim period, Alisher Apsalyamov has been appointed as Acting Head of Recruitment, focussing on gathering data on individual players. Ultimate recruitment decisions of course remain the domain of the manager and majority shareholder."
The reasoning behind Moody's subsequent sacking is unknown, although it is believed that owner Vincent Tan (pictured) felt the club overspent in the summer.
Apsalyamov, a friend of Tan's son with no previous experience in football, joined the club in February but his name did not previously appear on a list of key staff members on the club's official website.
Mackay has regularly praised Moody's scouting and recruitment work at the South Wales club, where he has helped to secure the likes of Steven Caulker, Gary Medel, Kevin Theophile-Catherine and Fraizer Campbell.
The loss of Moody has seen several bookmakers install highly-rated Mackay as the favourite to be the next Premier League manager to leave his post.
But while he is understood to be disappointed by events, he will be in charge when Cardiff face Chelsea a week on Saturday.
Tan insisted that Mackay was still his man for the job.
"I have every faith in Malky and his team to lead us through the challenges of the Premier League," Tan said. "I have supported him in the past and will do so in the future for many years to come.
"I would say to all Cardiff City fans and everyone connected to the club, let us look forward to the future and remain united in our support of the team."
All this comes just a matter of days after it was revealed Tan and the Bluebirds squad had been at loggerheads over end-of-season bonus payments.
Mackay confirmed following Saturday's 2-1 defeat to Newcastle that a resolution has been reached over the issue, but Cardiff's players are reportedly no longer happy for Tan to be in the dressing room on match days.