Laudrup steered Swansea to a 5-0 success over Bradford City in last season's League Cup final, but the club said that they had been forced to act due to ‘constant uncertainty’ surrounding his future.
Laudrup's relationship with the club reportedly became strained during the close season and a poor run of recent form has seen Swansea slide towards Premier League's relegation zone.
"It is a decision we have taken reluctantly, but is in the best interests of Swansea City Football Club," said Swansea Chairman Huw Jenkins.
"We had to remove the constant uncertainty surrounding the club and Michael's long-term future with us."
Swansea said that former captain Garry Monk would work as head coach alongside current first-team coach Alan Curtis ‘for the foreseeable future’.
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