They have parted company in the same week that she called for a "final solution" following the Manchester attack, which saw 22 people killed and dozens injured after a suicide bomber detonated a device as concert-goers left the Manchester Arena on Monday night.
Hopkins hosted a weekly show every Sunday on the station.
An LBC spokesman said: "LBC and Katie Hopkins have agreed that Katie will leave LBC effective immediately."
Hopkins, a former Apprentice contestant and now a columnist and broadcaster, caused outrage earlier this week with a tweet that appeared to reference the term used by the Nazis for the Holocaust.
The now-deleted tweet, made in the hours after the explosion, read: "22 dead - number rising. Schofield. Don't you even dare. Do not be a part of the problem. We need a final solution #Machester (sic)."
Complaints were made to the Metropolitan Police about Hopkins' tweet.
A spokesman for the Met said on Tuesday: "We can confirm that a complaint has been received by the Metropolitan Police Service on Tuesday, 23 May in relation to a tweet published on the same day.
"As is routine, the allegation will be reviewed and assessed by specialist officers."
The police have been contacted for an update.
Hopkins is currently employed by the MailOnline as a columnist.
The 42-year-old is known for being an outspoken commentator on far-ranging topics from terrorism and Islam, to children's names and obesity.
She has also appeared on reality TV programmes I'm A Celebrity ... Get Me Out Of Here! and Celebrity Big Brother, as well as fronting her own programmes on TLC entitled If Katie Hopkins Ruled the World and My Fat Story.
Following LBC's announcement, Hopkins has posted on Twitter but has not referenced her departure.
Hopkins, an avid tweeter, has said she is writing a MailOnline column about Labour leader Jeremy Corbyn.
After removing her initial tweet, Hopkins posted an amended version.
She wrote: "22 dead - number rising. Schofield. Don't you even dare. Do not be part of the problem. We need a true solution."
Hopkins added in another post: "typo / wording amended".