Director of football Petar Vasiljevic has been put in charge of the first team until Osasuna name Caparros's successor.
"In a meeting held this morning, the board of directors of Osasuna decided to dismiss Joaquin Caparros as manager of the first team," the club said on their website (www.osasuna.es), adding that a news conference would be held at 1700 local time (1600 GMT) to explain the decision.
Caparros has coached a long list of clubs, including Sevilla and Athletic Bilbao, and was one of the favourites, along with current national team coach Julen Lopetegui, for the Spain job following Vicente del Bosque's exit after last year's European Championship.
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Caparros's sacking is Osasuna's second and the La Liga's seventh managerial change this season.
Osasuna, who are rooted to the bottom of the table with seven points, five adrift of safety after 16 games, host Valencia on Monday.
(Reporting by Shravanth Vijayakumar in Bengaluru; Editing by Clare Fallon)
