The Black Cats have had a slow start to the campaign, and find themselves in 16th place and only two points above the relegation zone after 13 games.
Bruce led the Wearside club to only two wins in the league this season, and a 2-1 home defeat to Wigan at the weekend was the final straw for the former Birmingham boss.
The news of Bruce’s axing was released by chairman Ellis Short, who feels it is time for a change.
“This has been a difficult time for everyone at Sunderland and is not a situation that any of us envisaged or expected to be in,” the executive told Sky Sports.
“It is my job as chairman to act in the best interests of our football club at all times and I can assure everyone that this is not a decision that I have taken lightly.
“Sadly results this season have simply not been good enough and I feel the time is right to make a change.
“Steve has acted with honesty and integrity throughout, which is testament to the character and commitment he has shown during his time at Sunderland.
“I would like to personally place on record my thanks to him for his significant contribution to our football club over the past two and a half years and everyone here at Sunderland naturally wishes him the very best for the future.
“I would also like to thank our fans, who have endured a trying start to the season. Their support continues to be the driving force behind our club and is vital as we now look to the future,” he concluded.
Immediate favourites for the vacant position include Martin O’Neill and Mark Hughes, but Short gave no indication of timescales in regards to hiring a new manager.
By Gareth McKnight