United, who made the decision in the wake of United's 4-1 defeat at Watford, have put Michael Carrick in temporary charge while the club look to appoint an interim manager to the end of the season.
A statement said: "Manchester United announces that Ole Gunnar Solskjaer has left his role as manager. Ole will always be a legend at Manchester United and it is with regret that we have reached this difficult decision.
"While the past few weeks have been disappointing, they should not obscure all the work he has done over the past three years to rebuild the foundations for long-term success.
"Ole leaves with our sincerest thanks for his tireless efforts as manager and our very best wishes for the future. His place in the club's history will always be secure, not just for his story as a player, but as a great man and a manager who gave us many great moments. He will forever be welcome back at Old Trafford as part of the Manchester United family."
Former Scotland captain Darren Fletcher was reportedly in consideration as an interim manager, but caretaker Carrick will step up from his role as assistant manager with his first assignment a vital Champions League clash away to Villarreal coming up on Tuesday.
United have had a torrid run of results under Solskjaer, who himself took over on an interim basis back in December 2018 after the sacking of Jose Mourinho.
He rode out a chastening 5-0 home loss to Liverpool and appeared to be back in calmer waters after a 3-0 win at Tottenham, but a comprehensive derby loss to Manchester City meant that the Watford game was essentially a must-win.
Solskjaer insisted he could still turn things around in the wake of another chastening afternoon at Vicarage Road, but it appears the club disagree.
United keeper David De Gea gave a damning verdict on United's display at Watford, telling the BBC: " We don't know how to defend properly.
"It was embarrassing, the way we played. The first half was very poor - it's not acceptable for this club and the level of players that we have.
"It's another nightmare. There's been some difficulties but I don't really know what to say."