He believed that humans relied to much on this supernatural being. They would look to him for help , answers , whats morally right and wrong instead of figuring it out for themselves. By demolishing the belief of God , he would open up the creative mind of humans to think for themselves and make there own moral choices and decisions. Without God they would see the morallity of the world and not that of a supernatural being. His statement "God is dead" was also done to protect his statement of "There are no truths". If he had left his statement like this people would have said , well if you say there are no truths then your statement isnt true. This was a horrible flaw that would of been able to be used against him. By masking it into his statement of "God is dead" it is protected. What he meant by there are no truths is that that are no facts , just interpretations. Same goes for the concept of God. there are no facts about God , just interpretations made by people.
Another goal for Nietzche with this statement is to reveal the fault in the value system.