Although the Dutchman won the FA Cup on Saturday, with a 2-1 win over Crystal Palace at Wembley, his failure to qualify for the Champions League was enough for the club to sack him.
He was informed of the decision on Monday, but the club only confirmed it later in the evening.
“I would like to thank Louis and his staff for their excellent work in the past two years culminating in winning a record-equalling 12th FA Cup for the club (and securing him a title in four different countries),” executive vice-chairman Edward Woodward said in a statement published by United on their official website.
“He has behaved with great professionalism and dignity throughout his time here.
He leaves us with a legacy of having given several young players the confidence to show their ability on the highest stage.
“Everyone at the club wishes him all the best in the future.”