ESPN's Andrew Lopez and Adrian Wojnarowski first reported the news.
Lue previously worked with Pelicans executive vice president of basketball operations David Griffin from 2014-17 with the Cleveland Cavaliers.
The New York Times' Marc Stein reported that Jason Kidd, currently an assistant coach with the Los Angeles Lakers, is similarly up for consideration, also noting both Lue and Kidd will likely feature in the Brooklyn Nets' coaching search.
Gentry, 65, compiled a lackluster 175-225 record during his tenure, including a 30-42 mark in 2019-20.
Williamson quickly showed he's already well on his way to becoming one of the NBA's most electrifying players after a late start to his rookie campaign because of a knee injury. He's joined by Brandon Ingram, Jrue Holiday and Lonzo Ball to create an intriguing core.
The front office decided it was best to get a new voice to lead the coaching staff before expectations rise considerably heading into the 2020-21 season.
A trade request by superstar power forward Anthony Davis previously hovered over the franchise like a cloud leading up to the 2019 NBA trade deadline.
Davis ultimately remained with the team for the duration of the campaign, but Gentry admitted the situation created some issues in remarks following a victory over the Oklahoma City Thunder that February.
"To tell you the truth, this whole thing has been a dumpster fire," he told reporters. "It's just hard, you know, we want guys to be professional and do this, but it's hard for guys to go through what they've been through. To be able to come out and beat a team of that quality, I'm happy for all the guys."
Davis was traded to the Los Angeles Lakers during the 2019 offseason.
Although the distractions could be blamed for impacting the 2018-19 campaign, the fact the Pelicans made the postseason just once in Gentry's five years likely played a bigger role in his departure.
Gentry won an NBA title with the Golden State Warriors (2015) and an NCAA championship with Kansas (1988) during his time as an assistant.