The struggling Stars were beaten 3-0 at home by the Detroit Red Wings on Saturday, ending their campaign 11th in the 15-team Western Conference with a 22-22-4 record.
Nieuwendyk, an elegant forward who hoisted the Stanley Cup with the Calgary Flames, Stars and New Jersey Devils, was appointed as general manager of the Stars in May 2009.
"Joe Nieuwendyk has represented the Dallas Stars extremely well as the club's general manager and has helped put pieces in place that will once again turn this team into a contender," Dallas owner Tom Gaglardi said.
"However, I believe it is time to take this organization in a different direction with our intentions set on returning to the elite of the National Hockey League.
"My commitment to the Dallas Stars is unwavering, and I am confident we have found the right general manager to return us to the pathway of success."
Red Wings assistant general manager Jim Nill, who has spent 19 years in that team's front office, is widely expected to take over from Nieuwendyk, 46.
The Stars have twice won the Western Conference Finals, and went on to clinch the Stanley Cup for the only time in 1999 when Nieuwendyk earned the Conn Smythe Trophy as the post-season's most valuable player.
Joe Sacco was sacked as coach of the struggling Colorado Avalanche, meanwhile, a day after the team failed to reach the play-offs for a third straight season.
The Avalanche were beaten 3-1 at home by the Minnesota Wild on Saturday to end the season rock bottom in the 15-team Western Conference with a 16-25-7 record.
"The organization believes a change of leadership behind the bench is needed going forward," Colorado general manager Greg Sherman said in a statement.
"Joe has worked for this franchise for eight seasons and he is a dedicated and hard-working coach. We appreciate all he has done and wish him the best in the future."
Sacco, 44, was appointed as head coach of the Avalanche in June 2009 and took them into the playoffs in his first season in charge.
He had a 130-134-30 record with the team in his first NHL head coaching assignment.