It's unfriend: "To remove someone as a ‘friend’ on a social networking site such as Facebook."
From the announcement:
“It has both currency and potential longevity,” notes Christine Lindberg, Senior Lexicographer for Oxford’s US dictionary program. “In the online social networking context, its meaning is understood, so its adoption as a modern verb form makes this an interesting choice for Word of the Year. Most “un-” prefixed words are adjectives (unacceptable, unpleasant), and there are certainly some familiar “un-” verbs (uncap, unpack), but “unfriend” is different from the norm. It assumes a verb sense of “friend” that is really not used (at least not since maybe the 17th century!). Unfriend has real lex-appeal.”
"Real lex-appeal" is catchy, but unfriend? I second the opinion of Grant Barrett and Martha Barnette of radio's A Way with Words. They tweeted the announcement this morning with an acerbic commentary: "Hi. Welcome to five years ago."
Personally, I found Oxford's runner-up lists more timely and interesting than the winner. They include a couple of words I'd have chosen over unfriend as representative of 2009, including birther and hashtag, as well as a couple I've written about this year: Ardi and zombie bank. I got a chuckle out of deleb (a dead celebrity). Oxford's lists of Twitter word clusters (tweeple, tweetup, Twitterati, etc.) and Obamaisms (Obamanator, Obamalicious, etc.) are also worth a look.
If you want to know more about unfriend and its un- kin, Ben Zimmer has written extensively and entertainingly about them in the New York Times Magazine's On Language column ("The Age of Our Undoing") and in Visual Thesaurus ("The Un-Believable Un-Verb" and "The Language of Social Media: 'Unlike' Any Other.")