The news arrived a day after Spurs were thrashed 5-0 by Liverpool at White Hart Lane, which left the north London club five points below the Champions League places in seventh in the Premier League.
"The club can announce that agreement has been reached with head coach, Andre Villas-Boas, for the termination of his services," read a statement on the Tottenham website.
"The decision was by mutual consent and in the interests of all parties. We wish Andre well for the future. We shall make a further announcement in due course."
Villas-Boas, 36, had also seen his side demolished 6-0 at Manchester City last month, despite Spurs having invested around 105 million ($171 million, 124 million euros) on new players during the close season.
That expenditure was, however, offset by the sale of Gareth Bale to Real Madrid, and Spurs have scored just 15 goals in their 16 league games this season since the Welshman left the club.
Villas-Boas's dismissal represents his second consecutive failure at a London club, as he was sacked by Chelsea in March 2012 after only nine months at the Stamford Bridge helm.
He joined Spurs the following July, but despite leading the club to their highest points tally of the Premier League era last season (72), they missed out on a Champions League place to arch-rivals Arsenal.