George Karl, the reigning NBA coach of the year, will not return to the Nuggets.

Team president Josh Kroenke informed Karl on Thursday morning that he would not bring him back. He said the combination of Karl pushing for a contract extension, and the uncertainty surrounding Karl's possible interest in the Los Angeles Clippers job this week, led him to believe it was best to go in another direction and bring in a new coach.

Karl has one year left on his contract. Karl did not return calls seeking comment, but sent out a tweet around noon: "I want to thank Nuggets fans for their support over the past 8 yrs. The karma on the street was incredible. Denver will always be home."

About 2:45 p.m., Karl later tweeted: "It's a sad day for me, my staff and my family. Difficult decision to understand but memories with the Nuggets are the best I've ever had."

The Nuggets are expected to target two primary candidates to replace Karl: Indiana Pacers assistant Brian Shaw and Memphis Grizzlies coach Lionel Hollins, according to a league source. Hollins has been given permission by Memphis to look at jobs around the league, although his preference is to return.

Both the Clippers and the Brooklyn Nets are looking for a coach, too, and the 47-year-old Shaw is considered a top candidate for those jobs.

The Nuggets won 57 games this past season, an NBA franchise record, after which Karl was named coach of the year. Only one of Karl's teams advanced past the first round of the playoffs, however. The 2009 Nuggets made it to the Western Conference finals.

Karl's ouster comes on the heels of general manager Masai Ujiri leaving last week to take a similar job in Toronto.

"So, we lost a GM now and a coach, what's next?" tweeted Nuggets big man Kenneth Faried.

Nuggets point guard Ty Lawson was stunned. In a text message to The Denver Post, Lawson said: "All of this is crazy and unexpected, don't know what to say."

Kroenke believes he can attract an outstanding coach based on the young talent on the roster. Kroenke has scheduled a news conference for 11 a.m. Friday.

Assistant Nuggets general manager Pete D'Alessandro is the front-runner to replace Ujiri, although Kroenke is also looking at possible candidates outside the organization.

One of the key storylines going forward is what will happen with guard Andre Iguodala, who can opt out of his $16 million contract for next season and become a free agent. Iguodala was asked by text Thursday if the changes at coach and GM will affect his decision. Iguodala, leaving on a trip to China, replied: "Not sure, I need some time to let it sink in."

Nuggets forward Danilo Gallinari said: "I did not expect it. Now I trust Pete D'Alessando and Josh to make the right decisions for the future. I don't know. I've been with him for three years. I knew it was the last year of his contract (coming up) and we had a chance to do something good next season. It was great to be coached by him, one of the most winningest coaches in the NBA. It was an honor to be coached by him."

Gallinari is expected to be out until at least midseason as he recovers from surgery.

Karl has been the Nuggets' coach since midway through the 2004-05 season. He went 423-257 in his time in Denver.

The Nuggets won at least 50 games in five of the past six seasons, with the lone outlier coming in the lockout-shortened 2011-12 year.

Shaw played guard for seven teams during his NBA career (1990-2003), including the Lakers for their three NBA championships in 2000-02. He retired in 2003 and was a scout for the Lakers for one season. He was named an assistant coach in 2004. He stayed with the team until 2011 when he joined the Pacers, where he has been the associate head coach for the team that advanced to the Eastern Conference finals.

He was passed over for the Lakers head coaching job when Phil Jackson retired in 2011 and Mike Brown was elevated.

Hollins, 59, has been the head coach of the Memphis Grizzlies, which lost to San Antonio in the Western Conference finals this season, for the past 4½ seasons. He started in the NBA in 1975 playing for Portland, and then played for four other teams before retiring in 1985. He was an assistant at Arizona State before moving back to the NBA as an assistant in 1988 with the Phoenix Suns. He's been the Grizzlies' head coach on three separate occasions.