Hierro was tasked to coach Spain in the World Cup on the eve of the tournament, after Julen Lopetegui was fired for agreeing to take the Real Madrid job.
Spain, the 2010 World Cup winners, were knocked out in the pre-quarterfinals by Russia on penalties after they managed to win one game at the World Cup, against Iran.
RFEF said in a statement that Hierro had decided against returning to his old role and would instead seek a new challenge.
"(Hierro) rejected going back to his former position as the RFEF sporting director, to look for new horizons and face new professional challenges," the statement read.
"After two stints as the federation sporting director, the first one between 2007 and 2011 -- which was the best era of the senior national team, when it won the European Championship under Luis Aragones as coach in 2008 and the 2010 World Cup with Vicente del Bosque -- and a second stint from November 2007 until now," the statement read.
The statement added: "The RFEF wants to thank Fernando Hierro for his compromise and sense of duty when taking the reigns of the national team under extraordinary circumstances, as well as performing all his duties.
"The federation wants to highlight the professional and personal values of an extraordinary athlete, and we wish him the best."
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