Following the loss to Celtic, who won the Scottish Premiership for a seventh consecutive year thanks to the win, reports emerged that Gerrard - who is in charge of Liverpool's Under-19s side - is Rangers' top target to take over for next season.
"Rangers are grateful to Graeme, who did not hesitate when asked last October to become interim manager after the departure of Pedro Caixinha and then, at the turn of the year, when he was offered the role as manager until the end of the season", the club said in a statement.
Former Scotland global Michael Stewart thinks Rangers have put their hopes of finishing second in the Scottish Premiership in serious danger by sacking Graeme Murty and potentially cost themselves £500,000 in the process.
Former Rangers players Jimmy Nicholl and Jonatan Johansson have been placed in charge of the first team for the remaining three league games.
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"Graeme has had to contend with hard and challenging circumstances but conducted himself in a thoroughly professional manner".
After the match, Murty did not speak to the media.
This speculation was further fuelled when Graeme Murty was sacked by the Ibrox club on Tuesday.
Liverpool U18s boss Steven Gerrard has admitted to holding "positive talks" with Rangers over their vacant managerial role.
Liverpool Under-18s boss Gerrard is the favourite to take the Ibrox job at the end of the season.