Liverpool said in a statement: “The contribution Arne has made to Liverpool FC in the time that he has been with us has been significant, meaningful and – most importantly of all to supporters and ourselves – successful.
“At the same time, we have collectively come to the conclusion that change is necessary in order for the club to keep moving forward.
“We would like to take this opportunity to place on record our appreciation for Arne, who will always hold a special place in the history of this football club as the coach who delivered Liverpool’s 20th league title.
“He also helped guide the club through one of the most difficult periods imaginable following the loss of Diogo. The compassion and humanity he showed throughout that time said a great deal about him as a person.
“Nevertheless, the conclusion we have come to is built on a belief that the team’s trajectory is best addressed through a change of direction.
“Arne leaves with our gratitude, with a Premier League title to his name, and with the knowledge that he and his family will always be welcomed back at Anfield.”
Former Bournemouth manager Andoni Iraola, who guided the Cherries to a sixth-place finish, is said to be the favourite to replace the Dutchman at Anfield.
