The 56-year-old held talks with co-chairman Steve Parish earlier in the day following reports that the pair's relationship had broken down.
The BBC said assistant manager Keith Millen would take temporary charge of Palace for Saturday's trip to the Emirates Stadium.
Pulis achieved a minor miracle to steer the Londoners clear of the drop last season.
The bookmakers made the promoted team the favourites for relegation at the start of the campaign and they were second from bottom when the former Stoke City boss took over from Ian Holloway at Selhurst Park in November.
However, Palace went from strength to strength under Pulis and ended the season in 11th place after a five-match winning streak and only one defeat in their last eight games.
The Welshman, who has also managed lower league Gillingham, Bournemouth, Bristol City, Portsmouth and Plymouth Argyle, left Stoke by mutual consent in May 2013 after seven years in charge.
Two years into his Stoke reign he guided the club to the top flight after a 23-year absence.
Among the early favourites to replace Pulis at Palace are former Manchester United manager David Moyes and ex-Cardiff City boss Malky Mackay.
(Writing by Pritha Sarkar, editing by Tony Jimenez)
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