Ireland, who had full power over the Dolphins' football operations and personnel, was let go after six years on the job after Miami failed to make the playoffs for the fifth straight season with an 8-8 record.
The season was also marked by internal disputes over allegations by offensive tackle Jonathan Martin that he was bullied at the hands of teammate Richie Incognito.
Martin left the team and Incognito was suspended as the Dolphins launched a review of team policies and practices regarding player conflict.
"I want to personally thank Jeff for his hard work and dedication in building the team over the past six years," Dolphins owner Stephen Ross in a statement.
"After a series of discussions, we both felt that it was in our mutual best interest to part ways. Jeff was a loyal and dedicated member of the Dolphins and we wish him and his family nothing but the best."
"I've spent the last six years with the best organization in football," Ireland said. "Steve and I came to an agreement that the best thing moving forward for all parties would be to part ways."