The 47-year-old joined the Tangerines in May 2016 following their relegation to the second tier and guided them to the playoff finals, where they lost out to Hamilton Academical.
"It is disappointing that my time as manager of United has come to an end," McKinnon told the club's website. "It been an honour and a privilege to both play for and then manage my hometown club that I have supported all my life.
"I would like to thank the fans for their support over my time in charge. Also, I'd like to thank everyone at Dundee United for their efforts during my tenure.
"I wish the club every success moving forward and I'm certain they will be back where they belong shortly."
United have already commenced their search for a new manager and hope to have McKinnon's replacement in place for the trip to Dumbarton on Saturday.