I recently had the requirement to disable alerts in a Sharepoint 2010 installation. Originally I thought this would be accomplished via Central Admin under Application Management -> Manage Web Applications -> General Settings -> then turning alerts off. I expected this to basically disable alerts AND remove the "Alert Me" button from the site. However, the button still remained. To make matters worse, if a user now clicked this button and tried to create an alert, an exception was raised "Alerts have been turned off for this virtual server. For assistance, contact your server administrator".
So, now that we have alerts disabled in Central Admin, we need to get rid of the button. Here is how you do it.
1. Click on Site Permissions in the Site Actions menu.
2. Click on the Permission Levels button.
3. The Permission Levels page will show all of your permission levels, we'll need to change each one that you do not want alerts to show for (in my case, it was all of them).
4. Once you click on the level you want to modify, simply uncheck the Create Alerts checkbox and save.
Anyone with Full Control will still have the Alert Me button, as this can not be turned off for these users.