Marshall had been in caretaker charge following the sacking of Paul Lambert last week and oversaw Sunday's 2-1 FA Cup win over Leicester.
But, with Sherwood replacing Lambert, former Arsenal defender Marshall has now parted company with the Barclays Premier League strugglers.
Villa chief executive Tom Fox told the club's official website: "I'd like to thank Scott for his efforts during his time at the football club and especially under difficult circumstances at the weekend when he took the team for Sunday's FA Cup victory over Leicester City.
"We wish him all the best in the future."
Marshall worked with Lambert at Norwich before moving to Villa in 2013 and, while caretaker, was being assisted by goalkeeping coach Andy Marshall and under-21 boss Gordon Cowans.
Ex-Tottenham manager Sherwood was appointed on Saturday and watched Villa's fifth round win over the Foxes, which earned them a home quarter-final tie with neighbours West Brom.
He was linked with Swindon number two Luke Williams but has ruled out a move.
Sherwood told the Birmingham Mail: "He's at Swindon and is in a five-year contract
You'll never get him out
It's a non-starter."
Source : PA
Source: PA