The decision was taken at a board meeting over the weekend and broken to Mr Launders by Chris Akers, chairman of Leeds' parent company, Caspian, at a one-hour meeting at Elland Road yesterday morning. The meeting was also attended by Peter McCormick, a Leeds-based solicitor who sits on the club's board.
Mr Launders, who joined Leeds last August from Manchester United, where he had been finance director, is said to have been shocked by the decision.
"It came like a bolt out of the blue. He was clearly upset," said one source.
Although the brief statement issued to the Stock Exchange said that Mr Launders had resigned, he was left with no option but to go.
"His management style was abrasive and confrontational and he was not able to work with the existing management," one director of the club said.
"Things were not getting done. It reached the point where the board felt it could not last one day longer."
Mr Launders was a highly respected financial director of Manchester United and is credited with being one of the driving forces behind its commercial success and the redevelopment and expansion of the Old Trafford ground.
However, his skills failed to gel at Elland Road where Mr Launders was charged with the task of both developing a strategy for the club as a whole and taking forward the pounds 30m Arena project - Mr Akers' vision of turning Elland Road into the Madison Square Gardens of the UK as a property, leisure and multi-sports complex.
Mr Akers said: "It just did not work out. It was down to personality and management style and perhaps also we overloaded him with responsibilities."
He is being replaced by Jeremy Fenn, finance director of Caspian, who will take up the job of Leeds United's managing director.
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