The announcement was made on Friday following weeks of speculation that the Australian manager would be sacked, regardless of whether he won the Europa League final against Manchester United last month.
Tottenham would go on to beat the Red Devils 1-0 in Bilbao thanks to Brennan Johnson's first-half goal.
The news comes exactly two years to the day that the Australian was appointed.
"Following a review of performances and after significant reflection, the club can announce that Ange Postecoglou has been relieved of his duties," Spurs said in a statement via their website.
"Ange joined us from Celtic in the summer of 2023 and oversaw a period of change on the pitch, returning us to the attacking brand of football that has traditionally been associated with the Club, while writing a new chapter in our history by leading us to UEFA Europa League glory in Bilbao last month - an achievement that will live with us all forever.
"We are extremely grateful to Ange for his commitment and contribution during his two years at the Club. Ange will always be remembered as only the third manager in our history to deliver a European trophy, alongside legendary figures Bill Nicholson and Keith Burkinshaw.
"However, the Board has unanimously concluded that it is in the best interests of the Club for a change to take place. Following a positive start in the 2023/24 Premier League (PL) season, we recorded 78 points from the last 66 PL games. This culminated in our worst-ever PL finish last season.
"At times there were extenuating circumstances - injuries and then a decision to prioritise our European campaign. Whilst winning the Europa League this season ranks as one of the Club’s greatest moments, we cannot base our decision on emotions aligned to this triumph.
"It is crucial that we are able to compete on multiple fronts and believe a change of approach will give us the strongest chance for the coming season and beyond. This has been one of the toughest decisions we have had to make and is not a decision that we have taken lightly, nor one we have rushed to conclude.
"We have made what we believe is the right decision to give us the best chance of success going forward, not the easy decision.
"We have a talented, young squad and Ange has given us a great platform to build upon. We should like to express our gratitude to him. We wish him well for the future - he will always be welcome back at our home.
"News on the appointment of a new Head Coach will be announced in due course."
Nosedive in form
Postecoglou enjoyed a stellar start to his tenure at Spurs in the 2023/24 season, winning his first 10 games in charge and delivering some electrifying performances on the pitch.
However, the form soon tailed off and the north London side ultimately finished fifth in the Premier League.
That dip in form eventually carried over into the 2024/25 campaign, with Spurs recording their lowest-ever Premier League finish in 17th place, driven by a combination of horrendous injuries to key players and inconsistent performances.
Tottenham ended the season with just 38 points in the Premier League, their worst top-flight finish since the 1976/77 season.
They conceded 65 goals, went winless in eight of their last 10 league matches, and failed to beat a single top-six side after Christmas.
Postecoglou's Spurs also registered 22 losses in 38 games, which in any other season in English top-flight history with the same number of matches would have resulted in relegation.
'Something I will never forget'
He clashed with Tottenham fans during a defeat at Chelsea when he cupped his ear to them in a defiant gesture after a goal that was eventually disallowed.
That blunder encapsulated his turbulent time in north London, but the 59-year-old bowed out gracefully.
"When I reflect on my time as manager of Tottenham, my overriding emotion is one of pride," said Postecoglou, via his agency CAA Base.
"The opportunity to lead one of England's historic football clubs and bring back the glory it deserves will live with me for a lifetime.
"Sharing that experience with all those who truly love this club and seeing the impact it had on them is something I will never forget.
"That night in Bilbao was the culmination of two years of hard work, dedication and unwavering belief in a dream."
Brentford's Thomas Frank is rumoured to be lined up to take over the now vacant managerial role at the club.