The former Ajax and Rangers striker departs after just eight months in charge of the Championship side following his appointment on a two-and-a-half year deal in January.
The parting of ways comes after a run of four consecutive defeats where the Tigers conceded 11 times and scored just once to leave them sitting 20th in the table.
Arveladze guided Hull to safety last season but club chairman Acun Ilicali felt a change was needed after a poor start to the current campaign, with assistant manager Peter van der Veen also leaving the club.
“During the international break, we had a number of meetings with Shota to discuss the direction of the team and the future of the club,” said Ilicali.
“As these meetings went on, it became clear our views weren’t aligned so we have made the decision to part ways. Shota and Peter leave with our thanks, greatest respect and fond wishes for the future.”
Arveladze, now 49, spent four years at Rangers after joining the club in a £3million move from Ajax in 2001 and was part of the squad that won the domestic treble in 2002-03 and a double in 2004-05. He scored 44 goals in 95 appearances for the Ibrox side.