Wilder paid the price for United’s agonising Championship play-off final loss against Sunderland last season.
United finished third in the Championship and beat Bristol City in the play-off semi-finals before blowing the lead in a 2-1 defeat by Sunderland, who scored a stoppage-time winner through Tommy Watson at Wembley.
Wilder leaves Bramall Lane for the second time after a previous successful spell in charge of his boyhood team ended in 2021.
The 57-year-old, who led the Blades into the Premier League in 2019, returned in December 2023 after Paul Heckingbottom was sacked with the club bottom of the top flight.
“A Blade through and through, the legacy Chris and his staff have created here will never be forgotten, going right back to 2016 when he initially took the job with the club rooted in League One,” a club statement said.
United’s play-off final loss was a massive blow after they had been heavily involved in the race for automatic promotion.
Leeds and Burnley took the automatic promotion places after United won just two of their final seven regular-season matches.
American-based consortium COH Sports, who completed a takeover in December last year, had handed Wilder a new contract until the end of the 2027-28 season in January.
But they are now expected to appoint former Southampton and Hull boss Ruben Selles. (AFP)