Allardyce had been in charge of the Hammers for four seasons but just minutes after the defeat at St James' Park, West Ham released a statement saying: "The club have begun the search for a new manager after deciding not to renew Sam Allardyce’s contract.
"We would like to start by thanking Sam Allardyce for his valuable work since arriving at the Boleyn Ground four years ago.
"He leaves the club in a considerably better state then when he arrived and, for that, the board are truly grateful."
The 60-year-old coach, whose contract was due to expire in the summer, had faced criticism from some supporters after a troubled second half of the season which saw his side fall out of the Champions League places and finish in 12th spot.
West Ham were promoted from the Championship in Allardyce's first season in charge and went on to secure no lower than a 13th-place finish in the past three top-flight campaigns with the former Newcastle and Bolton Wanderers boss at the helm.
"I take great pride in what I have achieved. The team, the club is in a hugely more successful position than when I took over," he told the BBC.
"Everything I was asked to do I've delivered. It's probably the right time for us both to move on, I really enjoyed the ride."
Former West Ham defender and Croatia coach Slaven Bilic has been installed as favourite to replace Allardyce by bookmakers William Hill.
(Reporting By Douglas Beattie; editing by Justin Palmer)
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