It has been widely speculated for several weeks that the Capitals were contemplating a change at the General Manager position.
McPhee, named the fifth GM in team history on June 9, 1997, helped lead the Capitals to seven Southeast Division championships (1999-00, 2000-01, 2007-08, 2008-09, 2009-10, 2010-11 and 2012-13), seven 40-or-more win seasons (1997-98, 1999-00, 2000-01, 2007-08, 2008-09, 2009-10 and 2010-11) and set a club record for wins and points (2009-10).
Prior to joining the Capitals, McPhee spent five seasons as the Vice President and Director of Hockey Operations as well as alternate governor for the Vancouver Canucks.
Oates, 51, became the 16th head coach in Capitals history on June 26, 2012, and led the Capitals to the 2012-13 Southeast Division title.
He became the 22nd rookie coach to win a division title since 1969-70, guiding Washington to a record of 27-18-3.
However, it had been reported throughout the season that Oates butt-heads with several current and former members of the Capitals, which appears to have played a factor in Washington's decision.