Assistant coaches Tom Cichon and Patrick Kohlmann have also left the club, with Werner's exit confirmed on Wednesday.
Sporting director Marcel Schafer said the decision followed a thorough review of the season.
"We have spent the past few days carrying out a thorough final review of the recent season," Schafer said. "On Tuesday evening we decided that a change of head coach was necessary."
Schafer thanked Werner and his staff for their part in Leipzig's rebuild.
"We want to thank Ole, Tom and Patrick for all their hard work and commitment at RB Leipzig," he said. "They played an important role in our successful rebuild and in qualifying for the Champions League. Even so, we believe the challenges ahead require new ideas and a different approach."
Jan Zimmermann, another assistant under Werner, remains with the club for now, with RB Leipzig yet to confirm whether he will stay on under a new head coach.
Jurgen Klopp, Red Bull's head of global soccer, addressed the decision in an interview with Magenta TV, where he is working as a World Cup pundit.
"We act in an advisory capacity as the Global Team," Klopp said. "That means we were involved in the decision-making process. We analysed the season — Ole did a great job, we qualified for the Champions League. But at the same time we also have to look ahead."
Werner's dismissal, along with that of his coaching staff, is reported to cost RB Leipzig in the region of €3.5m, with the 38-year-old having had a year left on his contract.
Martin Demichelis, currently head coach at RCD Mallorca, is the leading candidate to replace Werner, with reports in Germany and Spain indicating Leipzig are set to trigger a €2.5m release clause in his contract.
Sky journalist Florian Plettenberg has reported that Demichelis is now expected to be confirmed as Werner's successor.
Klopp declined to be drawn on the specifics when asked about Demichelis.
"I really can't say anything about that right now," he said. "I don't get involved in speculation."
Werner had led Leipzig back into the Champions League despite a major squad overhaul that saw Xavi Simons, Lois Openda and Benjamin Sesko all depart the club last summer.