Martz, 57, who was head coach of the St. Louis Rams from 2000 through 2005 and offensive coordinator in Detroit for two years, spent just one season with the 49ers.
"After an evaluation period I felt it was best to go in a different direction," Singletary said.
"This was not an easy decision because I appreciate Mike Martz, and I enjoyed working with him. He is a true professional, and I wish him the best in the future."
After a slow start, San Francisco won five of its last nine games and finished with a record of 7-9 in 2008, placing second in the NFC West.