This was the first time since 1997 the Bills have missed the playoffs.
The dismissal by owner Ralph Wilson on Sunday night comes after general manager John Butler was fired last month.
Phillips had one year remaining on his contract. His dismissal was tied to his refusal to release Ronnie Jones, who was in his first year as special teams coach and was frequently criticized during the season.
"Buffalo special teams' record was among the worst in the National Football League last season," Wilson said Monday. "I felt we needed a change and that my request was reasonable. ... I did not want to release Wade but his refusal left me with no option."
Jones had been hired in the wake of the Music City Miracle, the special teams debacle that resulted in the Bills losing to the Tennessee Titans in last season's playoffs.
Phillips reportedly was in San Francisco on Monday and unavailable for immediate comment.
Bills defensive end Marcellus Wiley stopped by Ralph Wilson Stadium, not knowing the coach was out of town.
"As everybody's seeing, he'll go down with the ship," Wiley said. "It's unfortunate that he had to lose his job. It was to no avail."
Phillips and the Bills' entire offense took much of the blame for a series of late-season losses: The Bills lost four of their last five games and missed the playoffs for only the third time in 13 years.
Phillips and Wilson met at the owner's home in Palm Beach, Fla., last week. Phillips refused to discuss their conversation and Wilson was noncommittal when asked whether Phillips would be back.
The Bills were 29-19 in three seasons under Phillips. Buffalo was knocked out of the playoffs in the first round in 1998 by the Miami Dolphins and in 1999 by the Titans.
"Wade has done a good job for us, reaching the playoffs two out of the last three seasons," Wilson said. "But I felt the dismissal of the special teams coach was imperative for the improvement of our team."
Kicker Steve Christie was critical of the Bills' special team strategy this season, wondering why the team insisted on squib kicks.
Bum Phillips, an ex-NFL coach and Wade Phillips' father said he hadn't heard of the firing and hadn't spoken with his son.
"We got a weekly newspaper down here so I don't hear it all," Phillips said from his home in Goliad, Texas. "I haven't talked to Wade. I figure that's his business and he'll take care of it."
The elder Phillips said coaching in the NFL is a tough business.
"There ain't but two kinds of coaches in the NFL," Phillips said. "Them that's been fired and them that's going to be fired."
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