"Following a disciplinary hearing, it was felt that the club was left with no option but to dismiss," said a statement from the Knowsley Road club.
Saints have also revealed that they are investigating other incidents of alleged misconduct by their ex-coach.
Millward has already announced that he intends to appeal against his sacking.
"Ian remains cautiously optimistic that the appeal can succeed and allow him to be reinstated to his position of head coach with the aim of bring further glory and silverware to St Helens," said his legal representative, Richard Cramer.
Millward guided St Helens to five major trophies after taking over from Ellery Hanley in March 2000.
And the former Leigh coach said he was confident of bringing even more success to the club before his shock sacking.
"I am disappointed with the news. I am in the middle of a five-year contract and the aim was to bring continued success to St Helens," said Millward.
The club, currently second in the Super League table and through to the last eight of the Challenge Cup, decided to sack Millward after conducting an internal investigation.
Foul language to the fourth official at the Super League game between St Helens and Bradford on Easter Monday.
Saints also claim that Millward subsequently lied to a Rugby Football League disciplinary hearing about his actions during the Bulls game on 28 March.
They also say Millward distorted the truth about Martin Gleeson's move to Warrington at the end of last season.
"Ian was informed of the offer for Martin Gleeson one week before his actual transfer," said the statement.
"He understood our decision and confirmed that he would support it.
"When the chairman then went away on holiday, Ian blamed the decision to transfer Martin Gleeson on the chief executive Sean McGuire and has publicly and repeatedly stated that he was not informed, when he most certainly was.
"This again was most damaging and wholly unfair to the club's management."
St Helens chairman Eamonn McManus insisted the decision to dismiss Millward, who led the club to two Super League titles, two Challenge Cups and a World Club Challenge title, was not taken lightly.
"Unfortunately, given events, the club has been left with no option. No one person is bigger than the club," he said.
"The long-term name and reputation of St Helens is paramount and cannot be sacrificed to accommodate the kind of unacceptable behaviour displayed by the head coach, no matter what his coaching skills and reputation.
"It is beyond doubt that the trust and confidence between the club's principal officers and Ian has now irreparably broken down."
McManus also claimed that he had been put under immense pressure not to sack the popular coach.
"In the last week I have been deliberately and systematically subjected to a very public campaign of psychological warfare and pressure not to make this decision even from sources within the club," said McManus.
"I sincerely now hope the fans will, after hearing the facts, understand why this most difficult decision had to be taken."
Millward's assistant Dave Rotheram is expected to remain in charge of the team for Friday's trip to Hull.
But a host of top names have already been linked with the Knowsley Road job.
Former Australia Test coach Chris Anderson, who is out of work following his departure from Welsh rugby union club Gwent Dragons, and New Zealand boss Daniel Anderson have signalled their interest.
Millward's former right-hand man Jon Sharp, currently in charge of Huddersfield, could also be a candidate.
As for Millward, he will have no shortage of offers despite the manner of his dismissal by Saints.
He could return home to coach in the NRL - he has already been linked with St George Illawarra - but there are sure to be several Super League clubs keen on signing him.
Meanwhile, a leading St Helens supporter says Millward should not have been sacked.
David Lyon, editor of fans' website www.redvee.net, claims the charges against the Australian were not serious enough to warrant his dismissal.
"The only really serious incident concerned the alleged abuse of a junior official at the club," said Lyon.
But Lyon said whoever took over from Millward, if he was not reinstated, would get the backing of the fans.