"We would like to thank Ally for all his hard work and dedication over the last few years but we feel it is now in the best interests of all parties to move on. Assistant manager Kenny McDowall will take over his duties until the end of the season."
Former Rangers striker McCoist, 52, has been in charge at Ibrox since 2011 and steered the Scottish giants back to the second tier after their demotion to the fourth division for financial irregularities in 2012.
McCoist resigned on Monday following a poor run of results but said he would stay on until the end of his contract. He was in charge for Saturday's 2-0 home victory over Livingston.
Sunday's decision ended the uncertainty surrounding the future of the club's all-time record goalscorer.
Rangers, who were founded in 1873, had never played outside the top division from the formation of the Scottish League in 1890 until 2012, a year after winning their 54th title.
They are nine points behind leaders Hearts in the Championship (second tier) as they chase a third successive promotion and a return to the top flight.
(Writing by Ken Ferris, editing by Tony Jimenez)
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