Phil Brown has claimed he is 'very disappointed' by Hull's decision to relieve him of his duties on Monday morning (UK time).
The English Premier League club has placed him on gardening leave with immediate effect, with Brian Horton and Steve Parkin taking charge of the first team until further notice.
Hull lost 2-1 at home to Arsenal on Saturday with Nicklas Bendtner scoring a last-gasp winner.
The defeat left the Tigers second bottom of the standings, three points from safety.
"I am obviously very disappointed with the club's decision and the fact that I will now not have the opportunity to secure Hull City's status in the Barclays Premier League for a third consecutive season," Brown said in a statement released through the League Managers Association.
"Although I am extremely sad to be leaving Hull City, I am very proud of my achievements during my time as manager, especially having led the team into the top flight of football for the first time in the club's 104-year history and ahead of schedule."
"It has been a fantastic experience and I would like to offer my sincere thanks to all of the players, past and present, and also to my staff."
"Finally, I would like to thank the fans for their support and wish the club every success in the future."
Chairman Adam Pearson claimed taking such surprising and decisive action with just 10 games of the season remaining was in the best interests of the club.
A statement from Pearson read: "Retention of Premier League status is paramount and the board believes that a change in managerial direction is the correct option at this time."
"The club will keep supporters completely up to date in respect of any managerial appointment but, in the meantime, Brian Horton and Steve Parkin will prepare the team for our important game at Portsmouth next Saturday."
Pearson, who returned to the club for a second spell as chairman last October, has repeatedly warned of the dire financial consequences of relegation.
Hull, under previous chairman Paul Duffen, overspent on player wages in the aftermath of the promotion to Premier League in 2008.
Efforts were made to offload fringe players in the January transfer window but the club, nine million pounds ($AU 14.8 million) in debt, was unable to make major savings on its wage bill.
It is feared a player cull will be necessary if the Tigers fail to preserve their top-flight status.
Nevertheless, the decision to part company with Brown, the most successful manager in the club's history, comes out of the blue.
Brown was thought to be one game away from the sack at the time of Pearson's return following a poor start to the season but he appeared to have weathered the storm.
A dramatic win over Stoke on November 8 sparked a mini-revival and performances since, if not results, did not suggest the manager had lost the dressing room.
Brown, however, did have to apologise last week after members of the Women's Institute witnessed a public bust-up between team-mates Nick Barmby and Jimmy Bullard during a training exercise close to the Humber Bridge.
Hull was Brown's second managerial appointment after failing during a previous spell at Derby.
The former Bolton assistant boss, 50, was appointed in January 2007 having been brought to the club to work under predecessor Phil Parkinson.
He saved the club from relegation to the Championship that year and