Sportal.co.nz 03.Apr.2013Getty Images
Ireland finished second-to-last in this year's Six Nations, losing three and drawing one of their last four matches.
That was the final straw for the IRFU, who have decided to let Kidney's contract expire at the end of June, ending the 53-year-old's five-year tenure in charge of the Irish national team.
"The IRFU thank Declan Kidney for the unquestionable commitment, passion, professionalism and success he has delivered to Irish Rugby to date," a statement from the Irish governing body read.
"The IRFU, through the National Team Review Group, will continue the process of identifying suitable candidates for the Ireland coaching role."
Kidney's highlight as head coach came in his first year in charge when he led Ireland to a Six Nations grand slam in 2009.
Due to the IRFU's decision, assistant coach Les Kiss will become interim head coach for Ireland's upcoming tour of North America in June.