Furner, who is assistant to Australia head coach Tim Sheens for the forthcoming World Cup, has been removed from his role immediately, with assistant Andrew Dunemann taking over to the end of the season.
Furner, who played in Super League for Wigan and Leeds, was under contract until the end of 2014 and has become the first Raiders coach to be sacked in the club's 31-year history.
The Raiders are currently ninth in the table but have lost their last three games and their 68-4 defeat by Melbourne Storm earlier this month was their biggest ever losing margin.
In a statement, Canberra said: "The board made the tough decision feeling the team's inconsistent performances were not reflective of the talent within the squad and have decided to pursue a different direction for the future of the club.
"The board will take the time necessary to appoint the best head coach for the club."
Furner played 200 first-grade games for the Raiders and was a part of the club's most recent premiership success in 1994.
After his stint in Super League, he spent three seasons as an assistant coach at the Raiders before taking over the head coaching role in 2009.