Redknapp, heavily linked to the England job before the Football Association appointed Roy Hodgson last month, had one-year remaining on his contract and said in recent weeks he hoped to renew it.
But after a rollercoaster season where Spurs narrowly missed out on a place in the Champions League after pushing for the title, and Redknapp was cleared of tax evasion by an English court, chairman Daniel Levy decided a change was necessary.
"This is not a decision the board and I have taken lightly," Levy told the club's website in the early hours of the morning.
"Harry arrived at the club at a time when his experience and approach was exactly what was needed.
"This decision in no way detracts from the excellent work Harry has done during his time with the club and I should like to thank him for his achievements and contribution."
"We finished fourth and were unlucky at the end," he told Sky Sports television before heading off for a round of golf. "But I think the same outcome would have happened.
"I had four great years at Spurs. All you can do is leave the club in a better state than you found it and I did that, for sure."
The 65-year-old said he would look for another job in soccer, declared himself "fit as a fiddle" and would not be sitting around moping.
An unlikely run in Europe's top competition saw Spurs eventually knocked out in the quarter-finals by nine-times champions Real Madrid but only after they had turned heads by beating multiple winners AC and Inter Milan.
His admission during his tax evasion case in January and February that he was "the most disorganised person in the world" and that he writes "like a two-year-old and can't spell" was hardly the confession an owner of a high-flying, big-spending club wanted to hear from their manager.
During the trial Tottenham's good form continued but once Redknapp was cleared, and Fabio Capello stepped down as England manager and a massive media-led campaign was launched for the Spurs man to replace the Italian, problems started.
