A clearly infuriated Lippi, the 71-year-old Italian World Cup winner, made a brief but angry appearance in front of the media after the 2-1 defeat on Thursday in Dubai.
"My pay is very high and I take all the blame. I am quitting as China coach," the Xinhua news agency quoted him as saying.
"We could beat weaker opponents like Maldives and Guam, but when we encountered stronger teams like the Philippines and Syria, we could not play our own football."
Lippi then abruptly left the press conference.
Hours later, the Chinese Football Association (CFA) said in a statement that it had accepted Lippi's decision.
"We are really sorry that the unsatisfactory results disappoint all Chinese fans," the CFA said.
"The CFA will seriously reflect, rebuild the team, and try our best in the following World Cup qualifiers."
Syria's victory left them comfortably atop Group A in qualifying for the Qatar 2022 World Cup.
China are five points behind in second, only above the Philippines on goal difference, putting their World Cup hopes in peril.
It has been a turbulent year for Chinese football and Lippi's resignation is a dent to the government's hopes of making the country a superpower in the sport.
The former Juventus and Italy boss reportedly earned 180 million yuan ($25 million) per yearÂ in charge of China, making him one of the best-paid coaches in the world.
He quit the post in January after taking China to the Asian Cup quarter-finals, where they lost 3-0 to Iran, and his compatriot Fabio Cannavaro took over.
But Cannavaro lasted only two matches before saying that balancing the job with managing Chinese Super League side Guangzhou Evergrande was too much.
That saw Lippi return in May, but his second spell was to last only six matches.
China languish 69th in the FIFA world rankings and have reached the World Cup only once, in 2002, when they left without a point or scoring a goal.
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