McKellar, the 47-year-old who left his job as forwards coach with the Wallabies before last year's World Cup to take over from current England boss Steve Borthwick at Leicester, has paid the price for a poor first season with the Tigers.
The record 11-time English Premiership champions had an unconvincing campaign under former Brumbies coach McKellar, finishing eighth - 11 points adrift of the play-offs.
Michael Cheika's name has been linked with the job at one of England's biggest clubs. (AP PHOTO)
Still, McKellar's departure - described by Leicester as "mutually agreed" - came as a surprise, such is his glowing reputation. He had been tipped as Eddie Jones's Wallabies successor at one point.
"Leicester Tigers can confirm the departure of Dan McKellar from his role as Head Coach with immediate effect," a club statement read on Saturday.
"The decision has been mutually agreed following extensive discussions regarding the club's future direction.
"McKellar joined Tigers in July 2023 from the Wallabies – where he was Assistant Coach for the Australian national side – and oversaw 30 games at Tigers, in all competitions, during the 23/24 campaign.
"The club has commenced the process for finding a new Head Coach to lead the men's programme into the 24/25 season. Pre-season training for the men's players not on international duty commences on July 1 at Oval Park.
"We thank Dan for his contribution to Leicester Tigers and wish him, (wife) Carla, (and children) Amelie and Maya well for the future."
A report in British newspaper the Daily Telegraph said the Leicester board and senior players had not bought into McKellar's vision for the club.
Cheika, the 57-year-old former Wallabies coach who led Australia to the 2015 World Cup final, has been reported to be one of the leading candidates to replace McKellar.
He has not been involved in rugby since leaving his role as Argentina coach following the 2023 World Cup.
Cheika, who took the Pumas to the semi-finals at the tournament in France, has had success at club level in Europe - with Leinster and Stade Francais - and back home with the NSW Waratahs.
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