The team announced on its Twitter feed Thursday that it won't renew Renney's contract.
''Tom's done some great things for our hockey club,'' general manager Steve Tambellini said in a video statement posted on the Oilers' website. ''But we felt at this time it was the right decision to make a change.
''We're entering a new phase of our hockey club. We've got some great challenges, but ones that we're looking forward to. I want to thank Tom for his work that he's done with us.''
The Oilers were 32-40-10 this season, the second-worst record in the NHL, after going a league-worst 25-45-12 in 2010-11 in Renney's first season with the team.
''I'm not going to dissect Tom as a coach. He's a good man, a good coach,'' Tambellini said. ''I'm sure again he'll work again as a head coach soon.''
The Oilers have a stable of high draft picks, taking forwards Taylor Hall and Ryan Nugent-Hopkins first overall in the last two drafts. They are counting on Hall, Nugent-Hopkins and forwards Sam Gagner and Jordan Eberle, both 22, and 21-year-old Magnus Paajarvi to drive them back into playoff contention.
''We need to get to a different level of compete, a different level of competing for playoff spots,'' Tambellini said. ''We've had some young people now who have been here through a couple of years. We've had some veterans who have underachieved for whatever reason and expectations will increase, as they should.''
The 57-year-old Renney also has coached the New York Rangers and Vancouver Canucks.
''Obviously, it's about wins and losses,'' Renney said at the end of this season. ''I try to work hard. I try to be the good soldier in what the organization requires of me. I do try to let my body of work speak for itself.''
The timing of the announcement prompted speculation that former Calgary Flames coach Brent Sutter is in line to replace Renney. Sutter coached Canada in the world championship and the team was eliminated in the quarterfinals Thursday. Tambellini said Edmonton's announcement on the same day was a coincidence.
''As far as guys who are candidates out there, there's going to be a lot of speculation,'' Tambellini said. ''Brent, he's a good coach, there's no question about that, but let us go through the process and just get it right.''