The Magpies confirmed his departure after just nine months as they prepared to finalise a deal with former Liverpool and Real Madrid boss Rafael Benitez to replace him.
A club statement said: "After the defeat to Bournemouth on Saturday, the club has spent some time considering its position and has today concluded that Steve McClaren's employment with the club will end with immediate effect.
"We acknowledge that reaching this decision has taken a number of days and that this has caused uncertainty for everyone involved, in particular for Steve and the players, for which we apologise. However we felt that this time was necessary to ensure the right decisions were reached with the best interests of the club at heart."
McClaren departed with the club lying in 19th place on the Premier League table, and with only 10 games remaining in which to spare themselves a second relegation in seven years.
He has spent the last six days waiting to learn his fate in the full knowledge that potential replacements were being sounded out, and it is understood that managing director Lee Charnley was due to meet Benitez face-to-face for the first time after encouraging talks between intermediaries and his camp.
In the meantime, Charnley paid tribute to a man whose days have been numbered since Saturday's humbling 3-1 home defeat by Bournemouth.
Charnley said: "I would like to thank Steve personally for his services to Newcastle United. He is a man of integrity and class and he has conducted himself with great dignity during this difficult time.
"Steve worked tirelessly to try and bring success to Newcastle United. He has the utmost respect of all the players, staff and management and he leaves with our very best wishes and sincere thanks.
"We feel that a change is now needed in order to give the club the best possible chance of securing its Premier League future.
"A further announcement on a successor to Steve will be made in due course."
The Magpies now face a race against time to install McClaren's replacement in time to prepare the players for the trip to leaders Leicester City, although McClaren put them through their paces on Tuesday, Wednesday and Thursday before his departure.
The new man's first home game will be the clash with neighbours Sunderland on 21 March (AEDT), perhaps the biggest Tyne-Wear derby in years with both clubs battling the drop.