The Allam family confirmed that Pearson, 47, the club's chairman for six years from 2001, had had his consultancy role terminated "without notice and without compensation" on Tuesday morning.
Pearson said in a statement: "I wish to register my extreme surprise and disappointment at the sudden, and in my view totally unjustified, termination of my agreement."
The statement continued: "I had very much been looking forward to assisting in the development of a successful Hull City squad this summer. I have enjoyed my association with the club and wish them success in the future. This matter is now in the hands of my lawyers and I will be making no further comment until it is resolved to my satisfaction."
Speculation had mounted on Monday night that manager Nick Barmby, 38, had been suspended for comments made about the club's finances and that Pearson's future was in doubt. It had also been rumoured that the Allams were ready to sell the club.
The Allams flatly denied they were considering selling the club and refused to comment on whether or not Barmby had been suspended. But they did confirm that Pearson's consultancy role had been terminated.
The Allams' statement read: "When we acquired the football club we made it clear we would run it in accordance with sound and proper business principles and procedures. We have not and will not deviate from those principles.
"Therefore although we fully appreciate the supporters' and media's desire for information we cannot comment on the manager's position at the present time. We will however provide further information when we are able to do so.
"Having listened to media speculation over funds not being available in the January transfer window, we reiterate that funds were available as previously stated by us. We also confirm the club has terminated the consultancy agreement with Adam Pearson without notice and without compensation.
"We are also aware of speculation about the club being up for sale. We can categorically confirm there is no truth in that rumour and we are fully committed to Hull City and its future."