The Welshman guided Stoke into the Premier League during his second spell at the helm and later led them to an FA Cup final and into Europe.
But the Potters were dragged into relegation trouble last season and Pulis drew criticism from some sections of the Britannia Stadium support over his side's style of play.
A brief club statement read: "Stoke City and Tony Pulis confirm that they have mutually agreed that Tony will leave the Club with immediate effect."
Earlier, Stoke winger Matt Etherington had warned fans to be careful what they wish for as news of the manager's imminent departure began to circulate.
"I've spoken to a few of the other boys and they're shocked as well, it's hit us," he told Talksport.
"Fans were grumbling saying they wanted him out or wanted a change but it looks like they have got their wish.
"You have to be careful what you wish for in football sometimes. You look at Charlton under Alan Curbishley and look where they are now.
"Hopefully it won't go that way for us, hopefully we'll get someone in who will push us on and make us into a top-10 team.
"If you look at where Stoke were when he first came in - mid-table in the Championship - you can't argue he's done a fantastic job."
Sky Bet swiftly installed interim Chelsea boss Rafa Benitez as the early favourite to succeed him, with Roberto Di Matteo and ex-QPR manager Mark Hughes other frontrunners.
Pulis first took the Potters job in 2002 and returned in 2006 after a stint at Plymouth Argyle, overseeing promotion to the top flight two years later.
Behind Arsene Wenger, he was the second-longest serving manager in the country following Sir Alex Ferguson's retirement and David Moyes's subsequent move to Old Trafford from Everton.
Now Etherington hopes Stoke bring in the correct candidate to replace Pulis.
"We will wait and see who the club decide to bring in," he said.
"The chairman is a very sensible man, very level-headed and knows his football and he will definitely bring in the right person for Stoke."
Supporters became disenchanted with poor form and performances in the second half of the season which saw the Potters win just three of 19 league matches and briefly flirt with the prospect of relegation.
Pulis was often criticised for his side's over-physical approach to the game and a reliance on long-ball tactics.
But Etherington said there were understandable reasons behind his methods and that the manager had tried to change as best he could.
"We have definitely got better players at the club than we had when I joined in the first season in the Premier League," he added.
"The manager has a way he wants to play. First and foremost he wants us to be defensively very sound.
"You have to be solid or there is a big chance you will get relegated. That was his main priority, which was fair enough.
"There were times when we weren't pretty to watch but he had us well-drilled and that shouldn't be taken away from the job the manager has done.
"The gaffer said in pre-season he wanted the way we played to evolve and we started off relatively well.
"When it went bad and we weren't picking up results we maybe went back to the old ways.
"You can say it worked because it kept us up but we went back to basics to grind out results.
"The way we finished this season was poor, we all know that and the fans weren't happy and rightly so.
"We had the quality in the squad to finish higher this year. The players need to look at ourselves because we didn't perform."