Hendry had been the third longest tenured general manager in the National League but the Cubs, who own the second-worst record in the league despite one of the highest payrolls, said it was time to begin a fresh approach.
"My family and I appreciate Jim's dedication during our time with the Cubs and thank him for his overall 17 years of service to the Cubs organization," Cubs chairman Tom Ricketts said on the team's website.
"It is time for a fresh approach in our baseball leadership and our search begins immediately for our next general manager."
Hendry, a two-time World Series champion with the Minnesota Twins, first joined the team in 1994 as the director of player development. He was named general manager in 2002 and leaves as the only Cubs general manager to oversee three post-season teams (2003, 2007, 2008).
Assistant general manger Randy Bush will fill Hendry's place on an interim basis.
(Writing by Steve Keating in Toronto; Editing by Frank Pingue)