Richards, who coached the Tigers to European success in 2001 and 2002 has paid the price for a poor domestic season, and, Leicester's failure to qualify for the quarter-finals of the Heineken cup for the first time in four seasons.
Richards was the Leicester captain in the 1997 Heineken Cup final defeat to Brive. But bounced back to coach his sides to wins over Stade Francais (30-34) in 2001, and a memorable 15-9 win over Munster at the Millennium Stadium.
Richards spent over 20 years at Leicester. He made eight Heineken Cup appearances as a player, scoring one try. During his time as Tigers head coach, he took charge of 37 Heineken Cup games, winning 27, losing 10, with one draw.
Dean Richards said "I am disappointed to be leaving Leicester Tigers after 23 years at a wonderful club. However, I would like to wish the players and coaches the very best for the future and thank the fans for the tremendous support they have given me both as a player and as a coach."
Peter Tom, chairman of Leicester Football Club plc, said:
"I would like to place on record the gratitude of the board of directors and supporters for Dean's contribution to Leicester Tigers, both as a player and as director of rugby.
"He has guided the team to seven trophies in the past six years, including four consecutive Premiership titles and back-to-back Heineken Cup wins.
"Unfortunately there has been a steady decline in the team's performance over the past two seasons. The board felt that this decline could only be checked by significant changes within the playing structure. Dean did not find these changes acceptable."
Peter Tom added "For the remainder of the season, team affairs will initially be handled by chief executive Peter Wheeler, assisted by John Wells, Neil Back, and Martin Johnson. We will be advertising worldwide for a replacement, but do not intend to rush into any appointment."