"I informed Mike today that he will not return as head coach of the Jaguars," said the Jaguars' newly-hired general manager David Caldwell in a statement. "I know Mike well and do not want anyone to misinterpret the rationale behind my decision.
"Mike is an excellent coach and I am sure he will succeed in his next stop in the NFL. However, I must do what I believe is best for the Jacksonville Jaguars and immediately explore every avenue possible to turn our football team around."
Jacksonville finished last season with a franchise worst mark of 2-14, matching the Kansas City Chiefs for the NFL's worst record.
The Jaguars closed out the campaign with a five game losing streak - winning just once in their final 13 contests.
Mularkey, who was also head coach of the Buffalo Bills for two losing seasons (2004-05), becomes the eighth NFL head coach to be sacked since the end of the regular season.