Priestman and two other team officials were previously banned by FIFA from any soccer-related activity for one year after New Zealand complained Canadian staff flew drones over their training sessions before their opening match in Paris.
But following an independent review commissioned by Canada Soccer, the national governing body said Priestman and the other two individuals currently suspended by FIFA would not return and a search for a new head coach would commence shortly.
In July, Priestman apologised and said that, as the leader of the team, she accepted accountability and planned to cooperate fully with the investigation.
Disappointed Canada players look on after their Paris Games elimination at the hands of Germany. (AP PHOTO)
Canada Soccer released only a redacted copy of the summary report but acknowledged the Paris drone incident was a symptom of a past pattern of an unacceptable culture and insufficient oversight within the national teams.
"The findings of the independent investigator reveal that the incident itself was a symptom of a difficult and unacceptable past culture within the national teams," Canada Soccer CEO Kevin Blue and president Peter Augruso said on Tuesday.
"Quite simply, while players on the national teams performed admirably, cultural standards and management of the programs dating back several years fell short of expectations."
Among the report's findings, Priestman and an assistant coach "directed, approved and condoned" the use of a drone by a third member of the coaching staff to film an opposing team's training session at the Paris Games.
The report also determined that the Paris drone footage was not viewed by the national team players whose bid to defend the gold medal Canada won at the Tokyo 2020 Olympics ended with a quarter-final loss to Germany.
With the investigation now concluded, Canada Soccer is in the process of taking disciplinary steps which will be private.
