Liverpool have terminated the contract of manager Kenny Dalglish, owners Fenway Sports Group and the club have confirmed.
The announcement comes just 24 hours after the Scot returned from a meeting with principal owner John Henry and chairman Tom Werner in the United States. Dalglish paid the price for failing to close the gap on the top four with the Reds finishing eighth despite significant investment in playing staff in his 15 months in charge.
"Fenway Sports Group and Liverpool Football Club announce that Kenny Dalglish is to leave his post today as manager after having his contract terminated," said a joint statement.
"After a careful and deliberative review of the season the club came to the decision that a change was appropriate.
"It is not a decision that was reached lightly or hastily. The search for a new manager will begin immediately."
Werner said they had made a tough decision to remove a man who is held in such high esteem at Anfield following his exploits as a player and manager in his previous spell in charge.
He acknowledged the effect the 61-year-old had had in putting things on a more even keel after a disastrous six months under Roy Hodgson but felt a change was required.
"Kenny came into the club as manager at our request at a time when Liverpool Football Club really needed him," he said. "He didn't ask to be manager; he was asked to assume the role. He did so because he knew the club needed him.
"He did more than anyone else to stabilise Liverpool over the past year and a half and to get us once again looking forward. We owe him a great debt of gratitude.
"However, results in the Premier League have been disappointing and we believe to build on the progress that has already been made, we need to make a change. We are committed to delivering success for our supporters and our ambition remains resolute to return this great club to the elite of England and Europe, where it belongs."