Current Dodgers GM Ned Colletti will remain with the team as a senior advisor.
FOX Sports' Ken Rosenthal had previously reported that Colletti was "on the hot seat."
The Dodgers had the highest payroll in baseball this season at roughly $240 million. They lost to the Cardinals in the NLDS in four games. During Friedman's tenure, the Rays consistently had one of the lowest payrolls in baseball.
Colletti was hired as the Dodgers' GM prior to the 2006 season. The team was 783-674 under his leadership.
Friedman had been an investment banker before joining the Rays organization. Ten Rays players acquired by Friedman made their first All Star team while playing for Tampa Bay.
Friedman had been the Rays' VP of baseball operations since 2005, when he was 28 years old. Under his leadership, the Rays qualified for the playoffs four times, after missing the postseason in their first 10 seasons.
Tampa Bay advanced to the World Series in 2008 but lost to the Philadelphia Phillies in five games. The Rays had the second-lowest payroll in the majors that season, and won a total of 97 games. Friedman was named Executive of the Year by the Sporting News that year, the youngest winner in the award's 72-year history.
The Rays tweeted an image Tuesday thanking Friedman for his service to the team.
The Rays failed to advance past the ALDS in 2010, 2011 and 2013. They finished 77-85 this season, in fourth place in the AL East, after falling as far as 18 games below .500.
- Dan Gartland