General manager Rob Pelinka said in a statement: "We would like to thank Luke for his dedicated service over the last three years. We wish Luke and his family the best of luck moving forward."
Walton also commented on the move: "I want to thank Jeanie Buss and the Buss family for giving me the opportunity to coach the Lakers. This franchise and the city will always be special to me and my family."
L.A. finished a disappointing 37-45 this season, and Magic Johnson surprisingly stepped down as the Lakers' president of basketball operations Tuesday.
ESPN's Ramona Shelburne reported the Lakers had cursory discussions with Walton about possible ways forward, but little progress was made because the team planned to move on.
In three seasons as L.A.'s head coach, Walton went 98-148.
Adrian Wojnarowski of ESPN reported Ty Lue and Monty Williams are among the top candidates to replace Walton.
ESPN.com's Jackie MacMullan intimated in January that LeBron James' camp wasn't fond of Walton.
"It's clear to me, and probably to you, Brian, that LeBron's camp would prefer a coaching change—they're not too subtle about that," MacMullan said on the Brian Windhorst & The Hoop Collective podcast. "Not LeBron, but all the people around LeBron. There's plenty of them, and they've made it known. I don't think this is a shock, is it?"
Shortly after that news surfaced, Walton was reportedly involved in an "emotionally charged verbal exchange" with several of the team's veteran players following a loss to the Golden State Warriors on Feb. 2, according to The Athletic and Stadium's Shams Charania.
Things didn't get any prettier as the Lakers fell short of the postseason, marking the first time James has missed the playoffs since the 2004-05 season.
The Lakers hired Walton prior to the 2016-17 season after he emerged as one of the league's premier young minds on Steve Kerr's staff with the Golden State Warriors.
The move seemed like a perfect match.
The Lakers were in need of a fresh face who would be willing to see through the team's rebuild, and Walton fit the bill as an upstart who had championship experience.
With expectations tempered, the Lakers' group of youngsters sputtered to a 26-56 finish in Walton's first year on the bench. They went 35-47 in 2017-18 after adding point guard Lonzo Ball with the No. 2 overall pick.
However, the dynamic changed in a big way when James committed to the Lakers in free agency last summer.
The addition of James thrust L.A. into the playoff conversation. Although title aspirations remained something of a pipe dream, it wasn't far-fetched to think the Lakers could challenge for one of the Western Conference's higher seeds.
Still, Johnson tempered talk of a hot start and said the team would experience growing pains.
"As I was talking to Luke [with Pelinka], we said, 'Don't worry about if we get out to a bad start,'" Johnson told reporters at the start of training camp. "We have seen that with LeBron going to Miami, and we have seen that when he came back to Cleveland. He is going to struggle because there are so many new moving parts. But eventually we are going to get it, and we are going to be really a good team."
Johnson's tone reportedly changed seven games into the regular season.
Wojnarowski and Dave McMenamin reported for ESPN.com that Johnson "admonished" Walton in a meeting after the Lakers dropped consecutive road games against San Antonio and Minnesota. The discussion "elevated an already acute awareness within the Lakers coaching staff that there are intense and immediate pressures on Walton to deliver the franchise a winner in short order."
The Athletic's Sam Amick cited coaching sources who said Walton was "the most likely to feel his seat grow warm if there's an extended Lakers losing streak" as the team sputtered in the lead-up to its Christmas Day clash with the Warriors.
That foresight proved spot-on.
The Lakers stumbled down the stretch and missed the playoffs for the sixth straight season, and the groin injury James suffered Christmas Day contributed heavily to the team's struggles.