Offensive coordinator Khari Jones has been promoted to interim head coach.
"We would like to thank Mike Sherman for his hard work and dedication with our team," Alouettes general manager Kavis Reed said. "We would have preferred a different turn of events, but we believe that we are making this decision with the best interest of our organization and our team in mind.
"We had identified some key elements from last year where we wanted to see some changes, but unfortunately, these adjustments did not materialize. These decisions are never easy to take, but we believe that this is the right one to make. Our team is in good hands as Khari showed great things in 2018 and has a very solid experience in the CFL."
Sherman took over as head coach in December 2017. The team went 5-13 in his only season. He previously served as the head coach of Texas A&M from 2008-11 and the head coach of the Green Bay Packers for six seasons between 2000-05. The Packers reached the postseason in four years under Sherman.
Jones is entering his second season with the Alouettes. He previously served as the offensive coordinator of the BC Lions and Hamilton Tiger-Cats.
"This is a tremendous honour," Jones said in a statement. "I would have liked this announcement to occur in different circumstances, but I am ready to take on this new challenge. We have a great coaching staff and a group of hardworking, talented players. I am looking forward to seeing our players come together as we all work with them with one goal in mind."
The Canadian Football League took ownership of the Als last week after purchasing the franchise from the Wetenhall family. The sale of the club to the CFL is "part of an orderly transition to new long-term ownership." No timeline was given for the completion of the transition.
Sherman's departure is not linked to any upcoming change in ownership, but rather a football operations move, according to TSN's David William Naylor.