An unusually curt press release said that said its decision "resulted from a loss of confidence in Mr Conway's ability to continue to lead the company. All of these decisions received the unanimous vote of the independent directors."
Dave Duffield, PeopleSoft's founder and chairman, will become the company's new chief executive officer. In addition, the company announced the appointment of Kevin Parker and Phil Wilmington as co-presidents, and Aneel Bhusri as vice-chairman of the board. All of the changes are effective immediately.
A PeopleSoft UK spokesperson confirmed that Conway would not be presenting the keynote address at the company's UK event, PeopleSoft Connect, scheduled for next Monday in London. Instead, the speech will be given by Wilmington.
The company is holding a press conference later today.
PeopleSoft, a maker of business software, has been engaged in a bitter struggle to fight off a hostile takeover by rival Oracle.
The company, which last month hosted its annual customer convention, has been trying to hang onto its customers despite the merger effort. Some licensees have expressed reluctance to continue buying and upgrading their product until the fight is over.
At the customer convention, Conway gave an upbeat presentation and voiced optimism that PeopleSoft would endure, despite the travails of the takeover effort. But he also acknowledged that the 15-month battle against Oracle had taken a toll.
"Have you ever had a bad dream that just didn't end?" he asked conference attendees.
Just two weeks before the customer gathering, Oracle had won a key court decision in the federal government's effort to block the merger on antitrust grounds. The US Department of Justice had argued that a takeover would let Oracle illegally raise prices and would hurt industry innovation.
PeopleSoft did not discuss the Oracle offer in its statement on Friday except to note that "all decisions with respect to Oracle's tender offer have been made on the unanimous recommendation of the Transaction Committee of the Board."
Oracle has said PeopleSoft stakeholders have sold about 23.8 million shares to Oracle. Meanwhile, PeopleSoft has strengthened its ties with IBM, in what some see as a bid to bring a "white knight" to its side.
Parker, who also serves as chief financial officer, will be responsible for internal operations. Wilmington, who had overseen the company's American operations, will assume responsibility for worldwide field operations. Bhusri, a general partner with venture capital firm Greylock Management, will focus on product and technology strategy.
The company also said Friday that licence revenue for the third quarter is expected to exceed $150m.
Conway joined PeopleSoft in May 1999. Before his tenure at the software maker, he spent eight years at Oracle in a variety of executive roles including marketing, sales and operations. He also served as chief executive at TGV Software, a developer of applications for corporate intranets and the Internet.