In a statement posted to Twitter, Avenatti said he had informed Daniels "in writing" last month that his firm was terminating its representation of her "for various reasons that we cannot disclose publicly due to the attorney-client privilege."
"This was not a decision we made lightly and it came only after lengthy discussion, thought and deliberation, as well as consultation with other professionals," Avenatti added. "We wish Stormy all the best."
In a tweet of her own, Daniels announced that she had retained Oklahoma-based trial attorney Clark Brewster as her personal lawyer and said he would review "all legal matters involving me."
"I anticipate Mr. Brewster will serve as my primary counsel on all legal issues," Daniels concluded.
Daniels, whose real name is Stephanie Clifford, sued President Donald Trump in March 2018 over a hush-money deal that paid her $130,000 days before the 2016 election to keep silent about an alleged 2006 sexual tryst with Trump. The president has denied having an affair.
As Daniels' attorney, Avenatti became a significant presence on social media. He repeatedly attacked Trump and his then-personal attorney Michael Cohen and publicly flirted with a run for the 2020 Democratic presidential nomination.
The relationship between the two was not completely seamless. In November, Daniels claimed Avenatti had sued Trump for defamation without her approval. A federal judge in Los Angeles had thrown out that suit the previous month and ordered Daniels to pay Trump's legal fees, which the president's attorneys estimated to be $350,000.
Last week, the same federal judge, S. James Otero, dismissed Daniels' lawsuit seeking to void the hush-money agreement. In his ruling, Otero said the suit was irrelevant after Daniels “received exactly what she wanted” when Trump and Cohen agreed to rescind the deal.
Cohen pleaded guilty this past August to campaign finance violations for arranging the payment to Daniels. Cohen, who is scheduled to begin a three-year prison sentence later this year, says he did so at Trump's direction.
Fox News' Edmund DeMarch and The Associated Press contributed to this report.