"Huddersfield Town can confirm it has today parted company with first team manager Simon Grayson with immediate effect," the Championship club said in a statement.
"Everyone at the club wishes to reiterate and underline our thanks for what Simon achieved in their time here."
The move comes as something of a surprise, as former Leeds United boss Grayson had led the club to promotion in his first season as boss.
They also lie seven points clear of the relegation zone in their first campaign in the Championship, but have gone on a 12-match winless run, with six draws and six defeats.
Academy manager Mark Lillis and coach Steve Eyre have been put in joint charge for the FA Cup fourth round match at home to Leicester City on Saturday.
Terriers chairman Dean Hoyle, who also surprisingly sacked Lee Clark last term, attempted to explain his decision.
"In making this decision, we have thought long and hard. It has been made with both the short term and long term needs of the club in mind.
"We brought Simon in with the immediate aim to lead the club to promotion and he did that at the first attempt. It is an achievement for which we are grateful.
“We knew the transition to Championship football would be difficult and our targets for this season have been realistic, with retention of our status the priority.
“After exceeding all our expectations in the early part of the season, our results and performances as a team and from individual players have tailed off alarmingly.
"Worsening displays have accompanied a run of just six points and no wins from the last 12 League games, including some very heavy defeats, culminating at Watford last Saturday.
“Whilst we would all have hoped for even some modest signs of improvement to begin to emerge as the weeks have passed that has not been the case. This has made the position untenable."