Ireland are due to tour North America in June, playing matches against the USA and Canada - the tour will now be led by interim head coach Les Kiss, assisted by Gert Smal and Anthony Foley.
Kidney had overseen a disappointing Six Nations campaign, which began with a victory away at eventual champions Wales, but ended with losses to Scotland, England and Italy.
He had taken the job in 2008, winning the Grand Slam a year later with a team skippered by Brian O'Driscoll.
Ireland reached the quarter-finals of the World Cup in 2011 under his stewardship, losing 22-10 to Wales.
"The IRFU thank Declan Kidney for the unquestionable commitment, passion, professionalism and success he has delivered to Irish Rugby to-date," the statement read.
"The IRFU, through the National Team Review Group, will continue the process of identifying suitable candidates for the Ireland coaching role."
IRFU CEO Philip Browne thanked Kidney for his services to rugby in the country.
"His contribution and involvement across the spectrum of Irish rugby delivered under age, provincial, Grand Slam and Triple Crown success, and epitomises his passion, belief and commitment to the game," Browne said.