Coleman's assistant Steve Kean has also lost his job.
A statement on the club's official website reads: "Chris Coleman has provided a fantastic service during his ten years at the Club and it is disappointing that the Club has no alternative but to part company.
"As a team and organisation Fulham Football Club has goals to attain and success to achieve and by no means can this be compromised."
The club have confirmed that Northern Ireland manager Lawrie Sanchez will be caretaker manager for the five remaining games of the season.