The Portuguese, 55, guided United to League Cup and Europa League titles.
Mourinho's sacking comes after a fall-out with £89m record signing Paul Pogba, who was an unused substitute for the defeat at Anfield on Sunday.
But they are sixth in the Premier League, 19 points behind leaders Liverpool, who beat them 3-1 on Sunday.
"The club would like to thank Jose for his work during his time at Manchester United and to wish him success in the future."
The caretaker-manager to replace Mourinho, who took over from Louis van Gaal in May 2016, will not be assistant coach Michael Carrick or academy boss Nicky Butt.
The candidate will be drawn from outside the club, but will not be former Arsenal boss Arsene Wenger.
A familiar conclusion to a rocky season
United's haul of 26 points after their first 17 Premier League games, is their worst tally in the top flight at this stage since 1990-91.
They are 11 points off the top four and closer to the relegation zone than the top of the table.
Following a 1-1 draw with Wolves, midfielder Pogba said he wanted United to be able to "attack, attack, attack" at home, which led Mourinho to say the France midfielder would no longer be the club's "second captain".
In October, there were reports that Mourinho might be sacked prior to the home game against Newcastle, but after the team trailed 2-0, they turned it around to win 3-2 and seemingly buy the former Chelsea, Inter Milan, and Real Madrid boss more time.
Mourinho's agent Jorge Mendes attempted to calm the storm earlier in December by taking the extraordinary step of issuing a statement to say Mourinho was "very happy" and "fully committed" to the club.
But despite securing qualification to the Champions League last 16 where United will play Paris St-Germain, in the league though, they have won just one of their last six games.
Mourinho's dismissal continues his run of never completing four consecutive seasons in charge of a club.
Only once has he made it into a fourth campaign, but he left Chelsea on 17 December 2015 during his second spell at Stamford Bridge.
The Red Devils have won just two of their last eight matches in all competitions and sit 11 points off fourth place in the Premier League
Jose Mourinho has been sacked by Manchester United following their disappointing start to the season.
The Red Devils currently sit sixth in the Premier League table but have already lost five times in 17 matches, leaving them 19 points behind leaders Liverpool and 11 off fourth-placed Chelsea in the fight for Champions League places.
That follows a summer transfer window in which Mourinho routinely complained about a lack of signings, with the Portuguese unable to persuade the club's hierarchy to sign a new center-back.
Further to performances on the pitch, reports of dressing room unrest have overshadowed Man Utd's performances over the course of the season, with Mourinho's relationship with the club-record signing
Paul Pogba a constant talking point.
World Cup winner Pogba has struggled for consistency under Mourinho, and this season things seem to have taken a turn for the worse, with the former Juventus man unable to hold down a regular berth in Mourinho's preferred 11.
After Mourinho, who signed a contract extension in January, was sacked Pogba tweeted: "Caption this," with a knowing expression on his face, before deleting the social media post.
Hello, my name is Jack Sparrow. I'm a year old student from the Caribbean.
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