Muster had been present for Thiem's first two matches at the Australian Open but was conspicuous by his absence as the world No. 5 beat the American Taylor Fritz in four sets to reach the round of 16.
The No. 5 seed had brought in Muster earlier this month alongside his main coach, Nicolas Massu, hoping that Muster, who won the 1995 French Open, would be the catalyst for Grand Slam success. Thiem lost in the final in Paris in each of the past two years.
But Thiem said things had just not worked out.
"We ended our working relationship," Thiem told Austrian reporters at the Australian Open. "It did not fit. It's easy like that. It is just about work. We get along well personally, and we said in the beginning, if anything is not all right we will tell each other."
Earlier this month, Thiem had said that Muster would be present for 20 weeks on Tour this year. Muster, for his part, had said that Thiem was the only player he would have coached.
Thiem hired Massu, the former Olympic champion from Chile, in February 2019 and he made an immediate impact as Thiem won the BNP Paribas Open in Indian Wells the following month, his first Masters 1000 title on hard courts.
Thiem will play Frenchman Gael Monfils in the fourth round in Melbourne on Monday.