The company claimed that the athlete has "misled" them following the recent allegations of serial doping by the seven times Tour de France winner.
"Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him," the company said in a statement.
Armstrong has also stepped down as chairman of the Livestrong cancer charity, while Nike will continue to support the organisation.
"To spare the foundation any negative effects as a result of controversy surrounding my cycling career, I will conclude my chairmanship," Armstrong said.
The US Anti-Doping Agency has released a statement claiming that Armstrong has been involved in "the most sophisticated, professionalised and successful doping programme that sport has ever seen".
Lance Armstrong has been stripped of all his tour victories, while also being banned from cycling for life following the allegations.
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