Philadelphia was 4-12 this season, its worst record since Reid, 54, took over the team in 1999.
The Eagles closed the season with a 42-7 loss to the New York Giants Sunday.
Reid built a 130-93-1 record and coached the Eagles to Super Bowl XXXIX, which was won by the New England Patriots. His teams made the playoffs nine times but missed qualifying for the post-season each of the last two seasons.
"Andy Reid won the most games of any head coach in Eagles history and he is someone I respect greatly and will remain friends with for many years to come," Eagles Chief Executive Officer Jeffrey Lurie said. "But, it is time for the Eagles to move in a new direction. Coach Reid leaves us with a winning tradition that we can build upon. And we are very excited about the future."
NFL.com reported Sunday that Reid was informed of the pending coaching change in a meeting Friday with Lurie.
"Whatever he chooses will be the right thing," Reid said in the NFL.com report. "He's always done things for the best interest of the Eagles and I completely understand either way."