Adams, a lifelong Blades fan, had stressed he had wanted to remain at Bramall Lane in a bid to revive the club's fortunes after a miserable campaign which saw them relegated from the npower Championship. However, the 49-year-old met with owner Kevin McCabe on Tuesday when he was informed his services were no longer required.
McCabe told the club's official website, www.sufc.co.uk: "It is always difficult when managers leave because usually it occurs when a team has been in trouble, but this decision has been made as amicably as possible between us all."
He added: "Micky is an honourable, hard-working and honest man who has had difficult circumstances to deal with from the moment he came in. The task was a big one and no one, least of all myself, can criticise the effort he and Alan put in to turn around what was already an awkward season for us.
"He made it clear that he wanted the chance to lead us next season but the fact remains that we have been relegated. There will have to be changes in player personnel in the summer, young players will have to be given opportunities at the right time, and prudent recruitment implemented for what will be a really tough division to get out of.
"With that in mind I feel that in order to give ourselves the best opportunity we should make a clean sweep at the top and start afresh next season."
Adams said: "Obviously I am very, very disappointed with the decision but I still wish Sheffield United all the best. I am a Blade and will always be a Blade so I am just sorry that my move here has not worked out.
"I pass on my thanks to the fans and would still like to think that they regard me as one of them. To carry the support of so many of them in some pretty dark days was very much appreciated. But most of all I wish the McCabes well because if anyone deserves success it is Kevin and his family."
Adams' assistant Alan Cork has also left the club. Adams had only been with the south Yorkshire club since December 30 last year to become the Blades' third boss of the season following the sacking of Kevin Blackwell and the departure of Gary Speed to be Wales manager. John Carver also had a spell as caretaker manager.
However, the former Port Vale boss endured a miserable spell, winning just four out of 24 games as the Blades dropped into League One.
Source: PA
Source: PA