After taking training as usual on Monday morning, Challinor informed the Pools board that he wanted to leave the club to join National League side Stockport County.
Stockport made an approach for Challinor last week which Hartlepool rejected with the manager only recently signing a three year deal at Victoria Park.
Challinor then failed to play down the speculation when questioned about his future following Saturday’s 5-0 defeat at Leyton Orient.
In just under two years in charge, the 46-year-old guided Pools back to the Football League last season and has helped the club get off to a solid start back in League Two.
The news has shocked the Hartlepool fanbase.
Reacting to the news, club president and Soccer Saturday presenter Stelling posted on his Twitter account: “Let’s not sugar coat this, DC leaving is terrible for our club.
"But he IS man who made us live the dream of returning to EFL.
"He has been made an offer that no one would turn down. Let’s remember him as one of the best managers in our history and wish him well,” he added.
Now with Challinor set to leave, first team coach Antony Sweeney has been placed in interim charge of Tuesday night's Papa John’s Trophy fixture against Everton under-21s.
Challinor's last game in charge for Pools was the heavy defeat to Leyton Orient at the weekend.