Altman became a tech world sensation with the release nearly a year ago of ChatGPT, an artificial intelligence (AI) chatbot with unprecedented capabilities, churning out human-level content like poems or artwork in just seconds.
His dismissal caught the tech world by surprise, with rumors rife on social media as to the cause of the sudden sacking.
A statement about the firing by OpenAI referred to its stated mission of making sure AI benefits everyone, and said that new leadership is needed for the company to move forward.
Fellow OpenAI cofounder Greg Brockman was pushed from the company's board in the shakeup and put out late in the day that he quit.
"I'm super proud of what we've built... but based on today's news, I quit," Brockman said in a post on X.
"I continue to believe in the mission of creating safe AGI (artificial general intelligence)that benefits all of humanity."
Analysts scrambled to interpret the shakeup, and the sacking of 38-year-old Altman, a Stanford University dropout, entrepreneur, and computer coder.
"It sounded as though there were some ethical concerns which pushed the board to do something," said Creative Strategies analyst Carolina Milanesi.
"If he is being ousted because of ethical concerns, that is only going to be good for the company."
OpenAI's board said that Altman's departure followed a thorough review that found "he was not consistently candid in his communications with the board, hindering its ability to exercise its responsibilities."
"The board no longer has confidence in his ability to continue leading OpenAI," it concluded.
In a post on X, Altman said he "loved my time at OpenAI."
"It was transformative for me personally, and hopefully the world a little bit."
He promised "more to say about what's next later."
The launch of ChatGPT ignited a race in AI—hailed as the next big chapter in technology—with contenders including tech giants Amazon, Google, Microsoft, and Meta.
Microsoft has invested billions of dollars in OpenAI and has woven the company's technology into its offerings, including search engine Bing.
Altman has testified before US Congress about AI and spoken with heads of state about the technology, as pressure ramps up to regulate against risks such as AI's potential use in bioweapons, misinformation, and other threats.
Altman will be replaced on an interim basis by Mira Murati, the company's chief technology officer, the statement said.
Microsoft has a long-term agreement with OpenAI and remains "committed to our partnership, and to Mira and the team," chief executive Satya Nadella said in a post.
"Together, we will continue to deliver the meaningful benefits of this technology to the world."
'Lots of empathy'
Wedbush analyst Dan Ives believed that OpenAI's momentum is unlikely to be slowed by Altman's firing.
"Altman out as CEO of OpenAI is a shocker but ultimately Microsoft will just have more control of the situation," Ives said in a post on X, formerly known as Twitter.
"We see little concern going forward with him gone," Ives added.
OpenAI's board of directors includes OpenAI cofounder and chief scientist Ilya Sutskever.
Altman earlier this month led a major developers' conference for OpenAI, announcing new products that were largely met positively in Silicon Valley.
The young executive told AFP he understood some of the worries over AI and its disruptive powers.
"(I have) lots of empathy for why anyone would feel, however, they feel, about this," he said of the platform that is credited with launching the revolution in generative artificial intelligence.
Altman was speaking on the sidelines of the annual Asia-Pacific Economic Cooperation (APEC) summit in San Francisco where he was swarmed by fans after his appearance, many of whom wanted to take selfies with him. (AFP)