Kenny Dalglish's second stint in charge of Liverpool was ended by the club's American owners on Wednesday as the Anfield great paid the price for his side's worst Premier League finish for almost 20 years.
"Fenway Sports Group (FSG) and Liverpool Football Club announced that Kenny Dalglish is to leave his post today as
manager after having his contract terminated," the club said in a statement on their website.
"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."
"Kenny will always be more than a championship winning manager, more than a championship winning star player. He is in many ways the heart and soul of the club"
Liverpool owner John Henry
Principal owner John Henry was fulsome in his praise for the outgoing manager: "Kenny will always be more than a championship winning manager, more than a championship winning star player. He is in many ways the heart and soul of the club."
"Our job now is to identify and recruit the right person to take this Club forward and build on the strong foundations put in place during the last 18 months."
Liverpool, despite winning the League Cup - their first trophy since 2006 - and reaching the FA Cup final, could only finish eighth in the Premier League this season.
Dalglish also came under fire for the support he showed Luis Suarez before and after the striker had been charged for racially abusing Man United's Patrice Evra. He became aggressive in post-match interviews and controversially supported his team's decision to sport T-shirts emblazoned with Suarez's face before the FA had reached their verdict.
"It has been an honour and a privilege to have had the chance to come back to Liverpool Football Club as manager," said Dalglish.
"Of course I am disappointed with results in the league, but I would not have swapped the Carling (League) Cup win for anything as I know how much it meant to our fans and the club to be back winning trophies."
As a Liverpool player, Dalglish won numerous honours, including six English league titles and three European Cup trophies.
In his first spell in charge between 1985 and 1991 he won three league titles and two FA Cups.
Dalglish, 61, returned to the club to replace Roy Hodgson in January 2011 in a caretaker capacity with Liverpool 12th in the standings and four points above relegation.
He led them to sixth place last year and signed a three-year contract in May 2011.