AAP reported last month's Donald's job was under threat as the NRL finalised an investigation into a disparaging comment allegedly made in front of players.
The Australian Rugby League Commission confirmed his departure on Friday, after nine years in the role, ahead of the March 1 international at Allegiant Stadium.
Jess Skinner has been appointed as interim coach of the world No.1 side and included Dally M medallist Olivia Kernick and her Sydney Roosters teammate Keeley Davis in the side.
Kernick in particular was a controversial omission from last year's Pacific Championships squad.
A separate incident was the subject of an internal NRL investigation involving the league's human resources department after that tournament.
Sources told AAP the issue related to Donald allegedly using an expletive to refer to a journalist in front of players, while airing frustrations about coverage late last year.
At least one player shared details of the interaction more widely, before the NRL was made aware and started its own investigation.
The saga was complicated by the fact Donald had two separate contracts at the NRL, as national coach and general manager of women's player pathways.
The incident, coming after Donald's snub of Kernick from Australia's Pacific Championships squad, raised eyebrows at league HQ and among pundits.
Donald has been a long-time employee of the NRL, having started work as a game development manager in Queensland in 2002.
He has since become one of the most prominent and influential drivers in the women's space, while coaching the Jillaroos through their most dominant era.
Donald was at the helm for Australia's World Cup wins in 2017 and 2022, and at one stage took the Jillaroos on a seven-year, 15-match unbeaten run before his sole loss to New Zealand in 2023.
The veteran coach had eyed off taking the Jillaroos to another title in 2026, and was lauded for his pathways work during last year's inaugural Vegas venture.
But his decision to drop incumbent Kernick was widely criticised, days after she was named the NRLW's best player.
Donald then claimed part of his decision was because Kernick came off the bench in State of Origin, when she had in fact started for NSW.
Australia went through the Pacific Championships undefeated, flogging Papua New Guinea 84-0 before recording 14-0 and 24-4 victories over New Zealand.
It was during the final week of that camp when Donald was understood to have made the alleged comment that prompted the ongoing investigation.
JILLAROOS SQUAD: Tarryn Aitken, Kezie Apps (c), Ali Brigginshaw (c), Lauren Brown, Yasmin Clydsdale, Keeley Davis, Quincy Dodd, Jessika Elliston, Olivia Higgins, Keilee Joseph, Isabelle Kelly, Olivia Kernick, Shannon Mato, Mahalia Murphy, Tiana Penitani, Julia Robinson, Jessica Sergis, Simaima Taufa, Sarah Togatuki, Tamika Upton, Jakiya Whitfield.
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