The England board's decision, which it said was the unanimous view of the team's management, ends the divisive Pietersen's international career, freeing him up to spend more time playing in the lucrative Indian Premier League.
The issue has often been a source of friction between the South African-born swashbuckler and the England hierarchy.
Aged 33, Pietersen was dumped by the England board's newly-appointed managing director Paul Downton.
In a joint statement with Pietersen, the England board announced it had left the gifted batsman out of their squads for the upcoming one-day tour of the West Indies and the World T20 in Bangladesh and that this meant the end of his international career.
"Although I am obviously very sad the incredible journey has come to an end, I'm also hugely proud of what we, as a team, have achieved over the past nine years," Pietersen said.
"I feel extremely fortunate to have played at a time of great success for England cricket alongside some of the best cricketers the country has ever produced."
Pietersen's relationships with Andy Flower, who stepped down last week as coach, and skipper Alastair Cook reportedly soured even further during England's soul-destroying summer Down Under.
Senior batsman Jonathan Trott lasted only one Test of the 5-0 Ashes rout before heading home to deal with personal issues, while star spinner Graeme Swann retired after the third Test.
Downton, who oversaw the departure of Flower, hinted the need to restore team harmony had been the key reason behind Pietersen's exit.
"Clearly this was a tough decision because Kevin has been such an outstanding player for England, as the fact that he is the country's leading runscorer in international cricket demonstrates," Downton said.
"However everyone was aware that there was a need to begin the long-term planning after the Australia tour.
"Therefore we have decided the time is right to look to the future and start to rebuild not only the team but also team ethic and philosophy.
"England cricket owes a debt of gratitude to Kevin who has proved to be one of the most talented and exciting players to ever represent the country and his 13,797 runs are a testimony to his immense skill."
Pietersen's 23 Test hundreds, two short of the England record held by Cook, has come amidst a Test tally of 8181 runs at an impressive average of 47.28 in 104 matches.
The right-hander was England's top scorer in this summer's Ashes with 294 runs at 29.40.
Pietersen was able to dominate all-time great bowling in a way given to few batsmen as he proved in a maiden Test hundred when he thrillingly attacked Australian legends Glenn McGrath and Shane Warne to rescue a draw that helped England regain the Ashes at The Oval in 2005.
But the shotmaker's time in the England camp was also beset by off-field problems that saw him fall out with two national team coaches in Peter Moores and Flower.
Pietersen was dropped from the England team in 2012 after sending text messages alleged to be critical of then England captain Andrew Strauss to South African players.
He was later "reintegrated" into the team under new skipper Cook.