The 50-year-old guided Lazio to a third place in Serie A last season but they are 31 points behind leaders Juventus in eighth spot with seven games left.
Former Lazio striker Simone Inzaghi, 39, will take charge for the remainder of the season.
Pioli was appointed head coach in June 2014 after spells in charge of several clubs including Bologna and Parma.
Lazio have won just five of their last 22 Serie A games.
They were knocked out of the Europa League by Sparta Prague at the last-16 stage having lost a Champions League play-off round tie against Bayer Leverkusen last August.