Broncos officials told Walters on Thursday that his tenure as coach was over, after months of speculation about his future.
Among the pre-season favourites after going within minutes of lifting last year's premiership, the Broncos suffered a mid-season capitulation in 2024.
The form slump came amid a slew of injuries, while questions were asked over fullback Reece Walsh's form.
Broncos chairman Karl Morris confirmed the news.
"We feel deeply for Kev," he told News Corp.
"He will always be a respected guy and a legend of the Broncos and he will always be treated that way.
"Of course I am shocked. This is a huge job and a pressure job at the Broncos.
"We have great appreciation for Kevvie's efforts and wish him well."
Walters coached 99 games at the Broncos, winning 50 matches in total.
Brisbane have Trent Barrett on their coaching staff for next season, with the club to immediately begin a search for their next mentor.
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