Jeff Goodman of ESPN first reported the news.
The Rebels have lost five straight games and are now 11-14 on the year. The 4-8 record in the SEC is just one game ahead of last-place Vanderbilt.
Kennedy is in his 12th year with Ole Miss after joining the team in 2006.
The 49-year-old currently has a 245-154 record in his career at Oxford, making him the winningest coach in school history. He also spent one season at Cincinnati between Bob Huggins and Mick Cronin, producing a 21-13 record.
Gary Parrish of CBS Sports provided a note about his success:
Kennedy reached the NCAA tournament twice, including in 2012-13 when the squad won the SEC tournament. The team won 27 games that year, tied for the most in any single season in Rebels history.
Unfortunately, the squad struggled to find much success in 2017-18 and the two sides decided it was time to part ways. As Goodman noted, the coach was under contract through 2019.
Ole Miss currently has three commitments signed for the 2018 class, but the group ranks just 73rd in the country and 10th in the SEC, per 247Sports.
Kennedy will finish the season as the coach, beginning with Tuesday's home game against Arkansas.