Reports circulated on Monday morning that an announcement regarding the Dutchman's future was imminent and it came at 20:30BST via a statement on the club's website.
Executive vice-chairman Ed Woodward thanked van Gaal and his coaching staff "for their excellent work in the past two years, culminating in winning a record-equalling 12th FA Cup for the club (and securing him a title in four different countries)."
Van Gaal leaves United with one-year remaining on contract
Woodward said that van Gaal "has behaved with great professionalism and dignity throughout his time here" and after two years he has left the club "with a legacy of having given several young players the confidence to show their ability on the highest stage. Everyone at the club wishes him all the best in the future."
The club added, "A decision on a successor as manager will be announced soon."
Jose Mourinho is widely expected to take over having been available since leaving Chelsea in December. Reports suggest his arrival will be announced this week, and possibly even as early as Tuesday afternoon.
Meanwhile, van Gaal released a statement of his own, an extremely dignified one at that. His failures are well-documented, having dropped out of the top four this season resulting in qualification for the UEFA Europa League rather than UEFA Champions League. His style of football has often been dull and monotonous but he has done some positive work to stabilise the club since arriving. Multiple youngsters, including the prolific Marcus Rashford, have been bled through under van Gaal's management while the contract renewal of David de Gea and signing of Anthony Martial are two further highlights.
Van Gaal thanks fans for support in classy statement
Van Gaal said that "it has been an honour to manage such a magnificent club as Manchester United" and by holding the position for two years, he has "fulfilled a long-held ambition."
The 64-year-old, who is expected to retire after an excellent career, said he is "immensely proud to have helped United win the FA Cup for the 12th time in the club's history" and has "been privileged during my management career to have won 20 trophies but winning the FA Cup, which is steeped in so much history, will always be one of the most special achievements of my career."
When van Gaal joined the club, replacing David Moyes after a dreadful eight months in charge, he came off the back of guiding the Netherlands to 3rd place in the World Cup. He signed a three-year deal and spoke of his ambition to win the Premier League within two seasons. The arrogance was loved by United fans who were tired of Moyes to be like their rivals, Manchester City. It has not worked out fully and van Gaal said he is "very disappointed to be unable to complete our intended three-year plan. I believe that the foundations are firmly in place to enable the club to move forward and achieve even greater success."
He went on to say:
"I hope that winning the FA Cup will give the club a platform to build upon next season to restore the success that this passionate set of fans desire.
"Having managed in Holland, Spain and Germany, I had always hoped for the opportunity to manage in English football and be part of English culture. Both of these experiences have lived up to expectations and been fantastic.
"I thank my players and wish them well for next season. It has been a pleasure to work with them and it has been particularly rewarding to see so many young players take their chance to break into the first team and excel. I look forward to watching the continued development of these young players next season."
He also thanked the owners at Old Trafford and most importantly, he said that he "would also like to express my gratitude to the amazing United supporters. They are truly the best fans in the world."
"I am indebted to my support and coaching staff, who have given me their all during their time at the club," he said in his statement.
"I am deeply grateful to each and every member of the club’s staff - the sports science team, the medical team, the kit and laundry department, club administration, the press office, the manager's team, the Academy team, ground staff and the catering team, both at Old Trafford stadium and Carrington training ground, all of whom have given me their unwavering support in my time at United. Never in my 25 years as a manager have I been so well supported in my role."