The east London side are 17th in the table, one point above the relegation zone, having lost nine of their previous 12 Premier League matches.
The Chilean boss departs after 18 months in charge of the Hammers, having been appointed in May 2018 on a three-year deal.
“It is with great disappointment that we’ve had to make this decision,” said joint-chairman David Sullivan.
“It has become clear that that a change is required to get the club back on track in line with our ambitions this season.
“We felt it was necessary to act now in order to give the new manager as much time as possible to try and achieve that goal.”