Paul Hart has been "relieved of his duties as first-team manager" of Portsmouth, a statement issued by the English Premier League basement club said on Tuesday.
Portsmouth have won just twice in the league this season and are three points adrift at the bottom of the table and have the daunting task of hosting champions Manchester United on Saturday.
Hart, previously best known for his work with young players, including at Portsmouth, was offered the role of technical director, developing players from the age of 18-21, but the club said he had declined the post.
The south coast club have been beset by off-field problems this term.
Meanwhile the Premier League imposed a transfer ban on Portsmouth because of concerns regarding unpaid fees to other clubs.
And last month, chief executive Peter Storrie was charged with tax evasion.
"Paul has worked under very difficult circumstances with the financial restrictions the club has faced since he took over," Storrie said.
"However, the board feels that the team should have accrued more points to date and that we need a new man in charge to ensure Premier League survival.
"The board would like to thank Paul for his work not only in keeping the club in the Premier League last season but also for his time in charge of youth development.
"Paul is a man of great dignity and we hoped he would stay and help us develop younger players on the fringes of the first team. We are genuinely sad to see him leave. Everyone at the club wishes him well for the future."
Hart won only nine of his 29 games in charge at Fratton Park after replacing Tony Adams in February but was widely seen as having done a fine job in maintaining the 2008 FA Cup winners' top-flight status.
But the uncertainty surrounding the club's ownership meant he was unable to bring in new players pre-season to replace several high-profile departures, including England striker Peter Crouch and Croatia midfielder Niko Kranjcar, who both joined 2008 Pompey Cup-winning boss Harry Redknapp at Tottenham.
Hart's last game in charge was Sunday's 1-0 league defeat away to Stoke - a match where Portsmouth's Kevin-Prince Boateng had a penalty saved at 0-0 and Stoke's goal was scored by former Pompey striker Ricardo Fuller.
Source: AFP Global Edition