The former Rangers midfielder was halfway through his 18-month contract at the club after joining St Mirren in December 2015 following the resignation of Ian Murray.
But the Buddies sit bottom of the Scottish Championship, having failed to win any of their six league matches this season, with Saturday’s 1-1 draw at Dumbarton proving the last of his 32 games in charge.
Academy head Allan McManus has been placed in temporary charge.
A statement on the club’s official website said: “St Mirren have terminated the contracts of both manager Alex Rae and assistant manager David Farrell.
“The head of the club’s academy, Allan McManus, will take the team on an interim basis until a successor is appointed. This will be the board’s immediate priority.
“The board would like to thank both Alex and David for all of their efforts on behalf of the club and wish them all the best for the future.”