Bates' departure was expected, according to reports, after the team finished with a 7-9 record in his first year on the job.
"I had the opportunity to stay," Bates said in a written statement. "(Coach Mike Shanahan) has been very fair with me, and the final decision, for the Broncos and for me, was to step aside."
The Broncos finished 19th in overall defense and 30th against the run. Bates worked as Green Bay's defensive coordinator during the 2005 season when the Packers led the NFL in passing defense (167.5 yards per game) and ranked seventh in the league in overall defense (293.1 ypg).
While Bates had success with his system with the Green Bay Packers and Miami Dolphins, the Broncos were unable to master it.
Bates said he was "very saddened that things did not work out."
There was no immediate word on a replacement. Team spokesman Patrick Smyth said the Broncos would have no comment beyond Bates' statement.
Former Packers defensive coordinator Bob Slowik remains as the Broncos defensive coordinator and defensive backs coach. Slowik led the Packers defense in 2004, and was defensive backs coach from 2000-03.