"The decision to make this change was very difficult," Bucks general manager Jon Horst said in a statement Thursday. "Bud helped lead our team for five incredible seasons, to the Bucks' first title in 50 years, and into an era of sustained success. We are grateful for the culture of winning and leadership that Bud helped create in Milwaukee.
"This is an opportunity for us to refocus and reenergize our efforts as we continue building toward our next championship season."
Budenholzer had two years left on his deal worth approximately $16 million, sources told ESPN's Adrian Wojnarowski.
The Bucks won 58 games under Budenholzer during the 2022-23 season and entered the 2023 playoffs as the NBA's No. 1 overall seed but fell in the first round to the No. 8 seed Heat in five games, becoming only the sixth 1-seed in NBA history to lose to an 8-seed.
Budenholzer is just the fourth coach in the past 50 seasons to lead his team to the best record in the NBA and not return the following season, according to the Elias Sports Bureau, joining Mike Brown (2009-10 Cleveland Cavaliers), Phil Jackson (1997-98 Chicago Bulls) and Pat Riley (1989-90 Los Angeles Lakers).
Budenholzer's decision-making during the Heat series came under question when the Bucks squandered double-digit leads in Games 4 and 5. In Game 5, Milwaukee had a pair of opportunities to win the game on the final possessions of the fourth quarter and overtime, but Budenholzer elected not to use his final timeouts in either scenario.
Budenholzer acknowledged after Game 5 that he should have called a timeout to advance the ball at the end of the fourth quarter, but he also did not call a timeout before the final possession in overtime, and the Bucks never got a final shot off before their season ended.
Heat star Jimmy Butler delivered an all-time playoff performance -- averaging 37.6 points on 59.7% shooting -- but Bucks star Giannis Antetokounmpo was critical of the team's lack of adjustments to try to slow him down, saying he wished he had more reps defending Butler.
"Out of respect, you've got to let the coach make the adjustment," Antetokounmpo said after Game 5. "At the end of the day, I wish I could've guarded [Butler] more."
During Budenholzer's tenure, the Bucks transformed into a perennial contender and in the 2021 NBA Finals won the franchise's first championship in 50 years.
Milwaukee went 271-120 (.693) during the regular season with Budenholzer at the helm, the best record in the league across that span. The Bucks finished with the best record in the NBA during three separate seasons (2018-19, 2019-20 and 2022-23), but never made it to the Finals in any of those years. They dropped two playoff series against the Heat -- this season and in the Orlando bubble in 2020, both in five games -- when they were overwhelming favorites.
Speculation about Budenholzer's job status swirled following the 2020 playoff loss to Miami, but the Bucks rebounded to win a championship the next season. He signed a three-year contract extension after the 2021 season, which ran through the 2024-25 campaign.
Before Milwaukee, Budenholzer spent five seasons as coach of the Atlanta Hawks, going 213-197 (.520) during the regular season but finishing 17-22 (.436) in the playoffs.
Milwaukee assistant coaches under Budenholzer have become intriguing head-coaching candidates for teams with openings in recent years, including Darvin Ham, who was hired from the Bucks' staff to coach the Lakers in 2022. Current Bucks assistant Charles Lee is a finalist for the Detroit Pistons' coaching opening.