Phelan was installed as Hull caretaker boss following the departure of Steve Bruce in July and led the Tigers until October 13, when he was finally given the role on a full-time basis until the end of the season.
The 3-1 defeat away at West Bromwich Albion on Monday left Hull in 20th place on 13 points and without a win in the Premier League since November 6.
"The club can announce this evening (Tuesday) that it has parted company with head coach Mike Phelan," a statement read on their official Twitter page.
"The search for a replacement has begun and an announcement will be made in due course."
Hull have won just three times since securing promotion back to the top flight via the Championship play-offs last May and are currently three points from safety.
Phelan did however lead Hull to the EFL Cup semi-finals during his short reign in charge at the KCOM Stadium. They face Manchester United at Old Trafford in the first of two legs on January 10.
Hull had started the season in superb fashion, defeating reigning Premier League champions Leicester 2-1 at home before claiming a 2-0 away win at Swansea.
However, they have been unable to maintain that form and have won just once in their last 18 Premier League matches - a 2-1 home victory over Southampton - leaving them firmly embroiled in a relegation scrap.
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