Church stepped down from the job Thursday less than two months before the opening ceremonies of the Winter Games in Sochi, Russia.
"If there isn't confidence in what I'm doing, I need to step aside and let the team move on," Church told The Canadian Press in a phone interview. "I'm heartbroken, to be honest, about the whole situation."
He did not specify whether it was players or Hockey Canadaa management who questioned his competence.
"Just discussions I'd had over the last few days made that apparent, in some meetings I'd had with leadership," Church said. "I think it was just difference of opinion on the direction we were headed.
"In the end, I just decided if I'm getting in the way of where the team needs to go, I need to step aside and let them continue on in the process."
The move was a bombshell as the 21-player Olympic team was expected to be announced before the end of December. The Canadian women will attempt to win a fourth straight gold medal in Sochi after victories in 2002, 2006 and 2010.
Church, from Toronto, was hired to a two-year contract to coach the women's team in June 2012. He coached Canada to a women's world title in April of that year in Burlington, Vt.
Canada lost the final of this year's world championship to the U.S. in Ottawa.
The Canadian women have been training full time in Calgary since August in preparation for the Olympics. Canada was riding a three-game winning streak against archrival U.S. heading into Thursday night's game between the two countries in Calgary.
Canada went 4-0 to win the Four Nations Cup in November and held a 10-11 record against male midget-triple A teams in the Alberta Midget Hockey League.
When asked if Hockey Canada tried to convince him to stay or reverse his decision Church replied, "No, they did not."
Church said he was flying to Toronto later Thursday. The 40-year-old did not address the players before his departure. Church did not run the Canadian team's practice Wednesday.
Assistant coaches Lisa Haley and Danielle Goyette will continue as co-coaches until a new head coach is named, according to Hockey Canada's chief operating officer Scott Smith. The players were informed of Church's departure at their morning skate.
"Over the last few hours I've had discussions with Dan Church and effective just recently Dan has decided to resign for personal reasons," Smith said at news conference Thursday.
"We truly respect the amount of time that would go into thinking that way and making that personal decision. We respect Dan's personal wishes."
Smith, Hockey Canada president Bob Nicholson and female head scout Melody Davidson will determine who the next coach will be.
"Time certainly is of the essence," Smith said. "This decision came upon us in the last few hours and we're going to react as quickly as possible."
Davidson coached the Canadian women to gold medals in 2006 and 2010, but she was adamant she would not return to the bench.
"I stepped down in 2010 for a reason," Davidson said. "I left because it was time to be off that bench and I'm comfortable in the role I can play off the ice."
"I think there's some real good candidates there who can help us and bring a different voice than mine. I'll definitely support whatever direction we go in, but it's not going to involve me as part of the coaching staff."
Church coached the York University women's team for nine seasons. He lives in Toronto with his wife Regan.
Church's father died of cancer in January at age 70, but Church said his decision was not related to health or family matters.
He cut forward Jenelle Kohanchuk and defenders Tessa Bonhomme and Brigette Lacquette from the team in November. Another two forwards and a defender will be released when the Olympic squad is announced.
He and Davidson were ultimately responsible for choosing the 27 players invited to try out for the Olympic team. There is no firm date for the naming of the roster.
"We've always said we'll try to announce it before Christmas out of respect for the players and their families," Davidson said. "We're not committed to that either. We've said we would try our best."