The statement reads:
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.
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. He personifies everything that is good about Liverpool Football Club. He has always put the Club and its supporters first. Kenny will always be a part of the family at Anfield.
"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 Chairman Tom Werner said it was a tough decision, but ultimately one that needed to be made.
"Kenny came into the Club as Manager at our request at a time when Liverpool Football Club really needed him. 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 stabilize 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."