The 52-year-old, a former player alongside current boss Kenny Dalglish, returned to Anfield in 2008 at the invitation of Rafael Benitez and retained his position as assistant in January when highly-respected coach Steve Clarke arrived to coincide with Dalglish's replacement of Roy Hodgson.
"We'd like to place on record our thanks for all of Sammy's hard work over the years and the contribution he has made to Liverpool," Dalglish told the official club website.
"He has always been a credit to the football club and a credit to himself.
"Everyone at Liverpool FC wishes him all the best in his future career."
"I want to wish Kenny, the players and the supporters all the best going forward."
Liverpool said in a statement they "will continue to analyse the requirements of their backroom team and will make further announcements in due course".
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