A statement on the club's official website highlighted the new Football League rules governing youth development as the reason behind the decision, with Gradi set to continue his role behind the scenes as director of football at Gresty Road after 1,353 games in charge.
Gradi boasts an association with Crewe spanning three decades, having initially managed the club from 1983 until 2007, before returning to the hotseat for lengthy spells - officially as caretaker manager - following the dismissals of Steve Holland and Gudjon Thordarson in 2008 and 2009 respectively. The Railwaymen currently lie 18th in League Two.
The statement read: "The Football and Premier Leagues have published plans aimed at furthering developing youth development programmes at clubs. These plans will have significant impacts of clubs both financially and organisationally.
"The Crewe Alexandra board believes that youth development should still be a major investment for the club and intends to exploit any opportunities arising from such changes, despite the challenges it will face.
"As a result, Dario Gradi, whilst continuing his role as director of football and board director, will hand over first-team manager responsibilities to Steve Davis and concentrate on the future development and direction of the academy."
Source: PA
Source: PA