The Croatian replaced Sam Allardyce in June, 2015 and led West Ham to a seventh-placed finish in his first season. He also oversaw their move to the London Stadium but has won just two out of 11 league games in this campaign.
"West Ham United can confirm that Slaven Bilic has today left his position with the club," West Ham said in a statement.
Former Everton, Manchester United and Sunderland manager David Moyes, who is currently out of work, has been strongly linked with the position.
West Ham said they "believe a change is now necessary in order for the club to move forward positively and in line with their ambition".
"The club’s search for a new manager to take West Ham United forward is underway and an announcement regarding Bilic’s successor is expected to be made over the coming days," the statement added.
Moyes told BeInSport on Sunday that he was willing to take on the challenge of keeping the Hammers in the Premier League.
"I've always said I want to go back into club management. If the right opportunity comes around, I'll be interested."
Asked about West Ham before Bilic's sacking, the 54-year-old, who also had a brief and unsuccessful spell with Real Sociedad in Spain, said: "I am interested but at the moment that vacancy has not become available. I know what Slaven must be going through."
Bilic, who played as a defender for West Ham, has been under pressure throughout this campaign and although a League Cup win over Tottenham bought him time, a draw at bottom club Crystal Palace and the heavy home loss to Liverpool sealed his fate.
West Ham's joint chairmen David Sullivan and David Gold praised Bilic for his commitment and integrity.
"The board invested heavily signing the players Slaven believed would complete the squad he needed to push the club back towards the level we had reached in his first season, and we believe we have the players capable of doing that," they said.
"Sadly, performances and results have not been of the expected standard and, in recent weeks, we have not seen enough indication of the required improvement to give us the encouragement that things would change and we would meet our Premier League aspirations this season.
"We see this as an exciting opportunity to appoint a quality manager to the position to inject fresh ideas, organisation and enthusiasm into a very talented squad," Gold and Sullivan added.
Bilic’s coaching assistants Nikola Jurcevic, Edin Terzic, Julian Dicks and Miljenko Rak have also left the club.
(Reporting by Simon Evans, Editing by Ed Osmond)
