The 3-1 defeat to Liverpool at the weekend was the final straw for the Old Trafford board.
He will be replaced by an interim manager until a full-time appointment is made at the end of the season.
A statement from United on Tuesday morning said: “The club would like to thank Jose for his work during his time at Manchester United and to wish him success in the future.
“A new caretaker manager will be appointed until the end of the current season, while the club conducts a thorough recruitment process for a new, full-time manager.”
The news comes two days after United’s defeat at Anfield, which left them 19 points behind the table-topping Reds in sixth place, and 11 points off the top four.
Mourinho took charge at United, succeeding Louis van Gaal, in the summer of 2016 and they won the Europa League and League Cup in their first season under the Portuguese.
The Red Devils then finished second in the Premier League last term, before making a troubled start to this season, winning only seven of 17 league games and being knocked out of the League Cup at home by Championship club Derby.
First-team coach Michael Carrick will take training today and a new caretaker manager is to be appointed by the end of the week.