West Ham have sacked manager Manuel Pellegrini after a 2-1 home defeat by Leicester City - their ninth loss in the past 12 games.
The Hammers' latest defeat on Saturday leaves them 17th, one point above the Premier League relegation zone.
Former West Ham boss David Moyes is among the candidates being considered to replace Pellegrini.
"It is with great disappointment that we've had to make this decision," said joint-chairman David Sullivan.
"It has become clear 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."
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Pellegrini leaves after 18 months in charge, having been appointed in May 2018 on a three-year deal, and was told about his departure shortly after conducting post-match interviews.
West Ham made the announcement within two hours of losing to Leicester.
Moyes, who took charge of West Ham for six months between November 2017 and May 2018, is one of the favourites to replace Pellegrini, although no deal has been finalised.
In his last spell at the club, Moyes took over from Slaven Bilic with West Ham in the relegation zone and helped them secure safety with two games to spare, eventually finishing 13th in the Premier League.
He spent 11 years in charge of Everton before taking over from Sir Alex Ferguson at Manchester United in 2013, lasting 11 months in the job. Spells at Real Sociedad and Sunderland followed.
Asked after the game whether he was the right man to guide the Hammers out of trouble, Pellegrini said: "Of course. I am confident. I have a lot of experience of being in this position.
"When you don't get the result people talk about you being sacked. For me I only worry about managing games."
West Ham entertain Bournemouth on New Year's Day (17:30 GMT) but the club are yet to announce who will take charge for the game.
'Fans are coming to the game not wanting to come'
Hammers midfielder Declan Rice, who captained the team against Leicester, blamed a lack of confidence for the team's slide from fifth in the table at the end of September to the cusp of the bottom three.
"People were talking about us being top-six contenders and now we're so far away," said the 20-year-old.
"Fans are coming to the game pretty much not wanting to come. We need to pick up fast."
Pellegrini led them to 10th last season but becomes the sixth Premier League manager to lose his job this campaign.
As well as their poor form in the league, West Ham were also knocked out of the Carabao Cup by League One side Oxford United, losing 4-0 in September.
West Ham won 24 of their 64 matches under the Chilean, losing 29.
The Hammers have broken their transfer record twice under Pellegrini, paying £36m for Brazil winger Felipe Anderson in 2018 before a £45m deal for French striker Sebastien Haller in July as part of a £71m summer spend.
They have spent £155m while the former Manchester City boss has been in charge.
'West Ham need new manager bounce'
Former Tottenham midfielder Jermaine Jenas felt Pellegrini paid the price for failure to get consistent performances out of the club's big-money signings.
Jenas said on Match of the Day: "Of the seven changes Pellegrini made [against Leicester], there were four players who cost a lot of money - Sebastien Haller £45m, Felipe Anderson £36m, Pablo Fornals £24m and Issa Diop £22m - they have not had the returns from them.
"The money has been invested, all these four players started today but it was more of the same from West Ham.
"I think West Ham fans will be happy the decision has been made but worried about what they are going to do now.
"I think they will revert back to something like David Moyes and he did a good job there. If that will keep the West Ham fans happy, I'm not sure."
Ex-Liverpool midfielder Danny Murphy added: "The body language wasn't great, there is plenty of ability in the squad, no doubt.
"But the performance I saw was of a group of players that wasn't playing for the manager.
"I think if you're going to go backwards and go with someone you've used before and you can trust it would be Big Sam for me.
"If you want them to stay up and looking short term, he's done it."
Former West Ham keeper Rob Green told BBC Radio 5 Live he was not surprised by Pellegrini's departure.
"West Ham have reached that point in the season, much like Everton, where they were close enough to the relegation zone and have made a decision," said Green, who made 177 Premier League appearances for the Hammers between 2006 and 2011.
"The trick is whether you are able to get that new manager bounce like Watford have.
"That's certainly what West Ham need right now."
Green says former Arsenal manager Unai Emery is an "obvious shout" for the job.