Dalglish led the Reds to victory in the Carling Cup last season before losing to Chelsea in the FA Cup final but it was their league form that ultimately cost the Anfield legend his job. He was dismissed four days after Liverpool finished the Premier League season in eighth place, their worst finish for 18 years.
Henry, frontman of Reds owners Fenway Sports Group, told skysports.com: "The FA Cup would not have made any difference had he won it. For us we were 17th over the second half of the season and Liverpool should not be in that position."
He added: "I don't place the blame on Kenny and assistant Steve Clarke but I think it was obvious to every fan that something was wrong and something needed to be done."
Henry admits that Dalglish, who was in the role for 18 months after succeeding current England manager Roy Hodgson, was only ever going to be a short-term appointment.
He added: "When I first discussed making a change before he took the job, we danced around it and discussed what role he would take at some point.
"He did say that if it was the manager's job, he would only do it until we had the right young man to come in for the long term. We spoke two or three times before he actually took the job.
"Kenny was always saying no one man is bigger than the club. Everyone knows what it meant when he came back, how he did right the ship and brought all the disparate elements back together.
"There were a lot of different directions and he unified the club internally and externally - he did an incredible job of getting us all on the same page."
Dalglish has been succeeded by former Swansea manager Brendan Rodgers.