Steve Bruce becomes the first Premier League manager to leave his job this season after two wins in the first 13 games.
"It is my job to act in the best interests of our football club and I can assure everyone that this is not a decision that I have taken lightly," chairman Ellis Short said.
"Sadly results this season have simply not been good enough and I feel the time is right to make a change."
Bruce joined the Black Cats from Wigan Athletic in the summer of 2009 and led the club to a 10th place finish in the Premier League last season.
However, the Stadium of Light side were sixth at the end of January after opening the year with three wins and one draw.
They then sold striker Darren Bent to Aston Villa in a deal which could rise to £24m and results took a turn for the worse.
The team struggled to score goals and matters were compounded when £13m signing Asamoah Gyan left the club in September - Bruce claiming "parasites" turned Gyan's head after his goal in the 1-1 draw with England at Wembley in March.
The Black Cats have slumped to within two points of the relegation zone this season, and Short acted quickly to stop the rot.
"Steve has acted with honesty and integrity throughout, which is testament to the character and commitment he has shown during his time at Sunderland," Short added.
"I would like to personally place on record my thanks to him for his significant contribution to our football club over the past two and a half years and everyone here at Sunderland naturally wishes him the very best for the future.
"I would also like to thank our fans, who have endured a trying start to the season. Their support continues to be the driving force behind our club and is vital as we now look to the future."