She leaves the head coaching post after just two seasons with a record of 33-35.
"Our commitment is to bring a WNBA Championship to Phoenix," said Robert Sarver, the Mercury and Phoenix Suns Managing Partner on the team's Web site. "In the last two seasons the Mercury has gone from a team that won just eight games to the doorstep of the playoffs. We will begin the search immediately for the person who can take us to the next level in our effort to bring a championship to our very loyal fans."
Graf's contract expired at the end of the 2005 season and the two parties decided not to enter into a new contract.
"I'm proud of what I accomplished with the Mercury the last two seasons," Graf said. "But we didn't achieve our goal of getting this team to the playoffs."