Torre, who had held the job since 1995, made an unannounced trip from New York to the team's spring training complex in Tampa, Fla., accompanied by general manager Brian Cashman and chief operating officer Lonn Trost. Yankees president Randy Levine said Torre turned down the offer during the meeting, which lasted about one hour.

"It is now time for the New York Yankees to move forward," Levine said.

Torre made $7.5 million this year, the final season of a $19.2 million, three-year contract. His new deal would have included substantial bonuses for each round of the playoffs the team reached.

"We felt we needed to go to a performance-based mode," Levine said. "We thought it was very fair. It clearly was at the top of the market, but we respect Joe's decision."

Bench coach Don Mattingly is the leading contender to replace Torre. Yankees broadcaster Joe Girardi, the NL Manager of the Year with Florida in 2006, is another top contender.

Cashman said there will be a full search for a replacement.