NEW YORK (AP) _ The advertising agency that created the compulsive liar Joe Isuzu for car and truck commercials that rocketed to popularity with television viewers was dismissed from the $74 million account on Thursday.

American Isuzu Motors Inc. said it decided to end its 11-year relationship with Della Femina McNamee-WCRS, the New York-based ad agency that helped it introduce the Isuzu brand of cars, pickups and sport utility vehicles to the American consumer.

The car importer, based in City of Industry, Calif., offered no criticism of the agency in a statement announcing the decision.

''We have been very pleased with DFM's work over the past years,'' General Manager E.F. Kern Jr. said. ''But times change and Isuzu has determined that the time is right for new approaches to support our new objectives.''

The decision stunned agency executives who said they had no indication before they were notified Thursday afternoon that it was losing the account, which comprises about 9 percent of the agency's total billings of about $800 million.

''It comes as a great shock,'' said agency chairman Jerry Della Femina. ''We did a terrific job and I'm very proud of what we did. We built the brand name out of nothing.''

Della Femina's agency first won the Isuzu account in July 1980 just as American Isuzu was setting up shop in the U.S. The car company now has a network of 597 dealerships nationwide.

The agency created Joe Isuzu in 1986, starring actor David Leisure as the smarmy character. The ads were an instant success with television viewers.

Isuzu was shown as a prototypical untrustworthy car salesman, making outrageous claims about the car's performance even as his statements were contradicted and corrected in captions at the bottom of the commercial frame.

''It gets 94 miles per gallon city, 112 highway,'' he said in one early commercial as the subtitle flashed: ''He's lying. 34 mpg city, 40 highway.''

Undeterred, the salesman says, ''Its top speed is 300 miles per hour.'' The subtitle adds, ''Downhill in a hurricane.''

David Vadehra, who conducts consumer surveys about advertising popularity for the research firm Video Storyboard Tests Inc., said consumers reacted strongly to the commercials because they had never seen anything like that approach in American advertising.

''It was one of the very first examples that advertising can afford to take itself a little bit less seriously,'' he said.

The approach caused controversy among some of Isuzu's auto dealers, who thought they were being used unfairly as the butt of a joke, and among some advertising executives, who felt the broad lies Isuzu expressed reflected badly on the ad business as a whole.

But the campaign zoomed into Video Storyboard's list of 10 most popular ad campaigns with consumers in 1986 and stayed there until Isuzu dropped the character entirely from ads a year ago.

Della Femina said the agency disagreed with the company's decision to abandon use of the character but felt it had developed an effective campaign to succeed it anyway. The most recent ads have used the theme ''Isuzu. There is no comparison.''

Kern said in announcing the decision on the agency that its decision was not made because of declining sales.

Combined Isuzu car and truck sales for the first four months of the year were down 6 percent to 33,689 from 35,842 in the same period in 1990.

But the company said combined car and trick sales for April alone were up from the same month a year earlier.

''Our challenge is to ready the company for the market ahead, new products and new business opportunities,'' Kern said.

Della Femina said he had no intention of dismissing any of the agency's employees as a result of the account loss.

In fact, he said the agency's performance for Isuzu will free the agency to seek another car account.

One possibility is Subaru of America, which said last month that it was putting its $60 million account up for review.