"Paris Saint-Germain and Christophe Galtier have decided to terminate his contract as coach of the first team," the club announced in a statement published after sources close to the negotiations had revealed the news to AFP.
His replacement, Spain coach Luis Enrique, is expected to be unveiled by the club on Wednesday.
"Everyone at Paris Saint-Germain thanks Christophe Galtier, as well as his assistants Thierry Oleksiak and Joao Sacramento, for their professionalism and commitment over the course of the season, and wishes them the best in their future careers."
Galtier had a year remaining on his contract but his departure from the Qatar-owned club had been expected ever since the end of the last Ligue 1 season at the start of June.
The 56-year-old former Saint-Etienne, Lille and Nice coach was appointed a year ago and led PSG to a French record 11th title.
However, the team finished just a point ahead of runners-up Lens after losing seven games after the turn of the year.
Their league success was also overshadowed by a disappointing exit from the Champions League in the last 16 to Bayern Munich.
PSG also went out of the French Cup at the same stage to Marseille, and Galtier is the seventh coach to leave the club since the Qatari takeover of 2011.
The final weeks of Galtier's reign were marred by accusations that he made racist remarks about players during his previous job at Nice.
He has vehemently denied the accusations but will stand trial in December on charges of "moral harassment and discrimination on the grounds of actual or supposed membership or non-membership of a particular ethnic group, nation, alleged race or religion", according to prosecutors in Nice.
The offences are punishable by three years' imprisonment and a 45,000-euro ($49,000) fine.