"The club would like to place on record its thanks for the hard work, honesty and integrity he brought to the role," United confirmed in a short statement.
The new comes less than 48 hours after Manchester United lost 2-0 to Everton making it mathematically impossible for them to qualify for the Champions League.
Moyes arrived at Manchester United's training ground at Carrington on Tuesday morning where he was informed of the news by chief executive Ed Woodword.
Moyes, who turns 51 on Friday, was appointed on the recommendation of fellow-Scot Sir Alex Ferguson, who retired at the end of last season after 26 years in the job.
Moyes signed a six-year contract with the club last summer, but as the club failed to make the top four, it is believed United need only compensate him one year's wages – which would be around £4.5 million.
Manchester United legend Ryan Giggs has been confirmed as the interim manager until the end of the season.
Netherlands manager Louis van Gaal has been installed as the bookmakers' favourite for the permanent job and the former Barcelona and Ajax boss has confirmed he is leaving the Dutch national team after the World Cup.
Van Gaal has also been linked with the Tottenham job, but according to the Daily Mirror's North West football writer, the Dutchman has told Spurs officials he will not be going to White Hart Lane.
Dortmund manager Jurgen Klopp has also been linked although he extended his contract with the Bundesliga giants until 2018 only last October and appears to have ruled himself out telling the Guardian: "Manchester United is a great club and I feel very familiar with their wonderful fans. But my commitment to Borussia Dortmund and the people is not breakable."
-- Eurosport
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