Valdano sacked as Real Director General
"We have decided to end the contractual relationship with Jorge Valdano," construction magnate Perez said at a hastily-convened news conference at Real's Bernabeu stadium following a meeting of the club's board of directors.
"The experience of this season has shown the need for a new organisational structure giving authority to the coach and avoiding dysfunctions with the directorate general," he added.
"I do not want to hide the pain I feel at the exit of Jorge Valdano, but my feelings cannot be a reason for not taking the necessary decisions.
"There were two people filling a sporting role between whom there was no understanding. Ignoring the evidence is not practical for anyone."
Perez's decision to dump Valdano and back Mourinho, a proven winner in Portugal, England and Italy, is borne of his desperation to put Real back at the top of club football and his obsession with winning a 10th European crown.
Valdano's position had been in doubt after his relationship with Mourinho deteriorated following the Portuguese coach's arrival from Inter Milan at the end of last season.
Used to wielding more power in previous managerial stints, Mourinho was reportedly also harbouring a grudge over a newspaper column Valdano wrote several years ago criticising his tactics as manager of English Premier League club Chelsea.
The pair clashed at the end of last year after Valdano questioned Mourinho's request for another striker to be brought in as cover for the injured Gonzalo Higuain.
"I am not the one who turned Real Madrid into a battlefield," Argentine Valdano, who typically acts as a spokesman for the club in post-match television interviews, said at a later news conference.
"All my efforts this season were directed toward restraint," he added.
"It has been a long time since I have spoken personally to Mourinho. We greet each other politely, but he sought to deal with people other than me.
"My responsibilities with the first team were reduced. I did not feel comfortable in that situation."
Valdano, a former Real player and coach and a World Cup winner with Argentina in 1986, has been Perez's right-hand man in both his stints as president.
He returned as director general when Perez was elected unopposed to a second term at the end of the 2008/09 season.
Despite the arrival of Mourinho, Real's bid to reverse the recent domination of arch rivals Barcelona failed this season as the Catalan club won a third straight La Liga title and knocked Real out of the Champions League in the semi-finals.
Real's only silverware came in the domestic cup when they beat Barca 1-0 in a dramatic King's Cup Final in Valencia.