He coached Wyoming for five years, taking the Cowboys to two bowl games. Wyoming finished 5-7 after starting 4-2, ending the season with a 35-7 loss to Utah State on Saturday.
"We have come to a point where our football program has not achieved at the level of success that we expect, and we know from past experience that we can be successful," athletic director Tom Burman said in a statement. "It is with that in mind that we move forward in search of a new leader for Cowboy football."
Christensen has three years remaining on a contract that runs through 2016. Wyoming said it will pay Christensen's base salary for the remaining three years for a total buyout of $570,024. The buyout will not be paid with state money, the school said.
During last season, Christensen was caught on video screaming profanities at Air Force coach Troy Calhoun after a loss to the Falcons. The school suspended Christensen for a game for the tirade and fined him $50,000.
Christensen went 27-35 in Laramie, and 16-23 in the Mountain West Conference. He took over after a successful stint as Missouri's offensive coordinator and led the Cowboys to a bowl game in his first and third seasons. Wyoming went 8-5 in 2011, but slid back to 4-8 last year.
Christensen worked under Gary Pinkel at Missouri and coached quarterback Chase Daniel when the quarterback was a Heisman Trophy finalist.