The Oilers have missed the playoffs seven straight years. They were 19-22-7 in the lockout-shortened season.
General manager Craig MacTavish, who addressed the media at a late-afternoon news conference, said he spent a week in discussions with Krueger about bringing on a veteran assistant coach.
"During the process of me conducting those interviews, I recognized I was trying to add a coach that was more closely aligned with the way I wanted to run the team than I was in supporting Ralph and the head coach of our team at the time," MacTavish said.
MacTavish, who took over as general manager this spring, said the team is "very close" to hiring a new coach. A deal hasn't been completed, and MacTavish wouldn't reveal the name of the candidate.
Krueger spent one season as head coach after serving as an associate coach for two seasons. The Oilers dismissed Tom Renney in 2012 after two seasons on the job.
Edmonton finished fifth in the Northwest Division in both years with Renney behind the bench.
The Oilers, who are loaded with top young players like Taylor Hall, Jordan Eberle, Ryan Nugent-Hopkins and Nail Yakupov, will now have their third coach in three seasons.
Some of the potential options include former NHL head coaches Lindy Ruff, Alain Vigneault, and John Tortorella, and Dallas Eakins of the AHL's Toronto Marlies.
The 53-year-old Krueger was the head coach of the Swiss national team from 1997-2010. He led the team to 12 world championship appearances and three Winter Olympics. He also coached VEU Feldkirch in Austria's first division.
MacTavish admitted the decision to remove Krueger would be disruptive to the Oilers, but added that his other concerns trumped any issues about continuity.
"Philosophically, I differ somewhat with Ralph, and it doesn't mean my strategy is right or Ralph's strategy is right," MacTavish said. "But I'm the general manager, and it's my job and my decision to make. That's why I've made that decision."
MacTavish said he still wants to add a new assistant coach. The GM said he will also have more "difficult decisions" to make, and that the team is headed toward a "tumultuous" summer.
"I don't think this was in any way fair to Ralph," MacTavish said. "This wasn't about being fair to Ralph. I mean, it was a consideration in this. You always want to be as fair with your personnel and your staff as possible.
"Ralph was unquestionably 100 percent committed to the Edmonton Oilers. His passion and energy is amazing and we wish him nothing but the best as he moves forward in his impressive career."
Brides of the West #3) (HeartQuest)