Dyche has been at Burnley since 2012 and led them to two promotions to the Premier League. He was the league’s longest-reigning manager.
The 50-year-old leaves Burnley with the club in the relegation zone. They are 18th in the league, four points behind 17th-placed Everton with eight games left to play.
Under-23s coach Mike Jackson will take interim charge, assisted by captain Ben Mee, academy director Paul Jenkins, and under-23s goalkeeping coach Connor King.
The Athletic understands that Burnley’s players were informed of the change early on Friday morning.
A club statement confirming his departure said: “Burnley Football Club can confirm the club has parted company with manager Sean Dyche, assistant manager Ian Woan, first-team coach Steve Stone and goalkeeping coach Billy Mercer.”
Burnley have only won four league games this season, drawing eight and losing 14 of their 30 matches.
Dyche, who had been due to speak to the media at 1.15pm BST on Friday, is the tenth Premier League manager to be sacked this season, following Xisco Munoz, Steve Bruce, Nuno Espirito Santo, Daniel Farke, Dean Smith, Ole Gunnar Solskjaer, Rafa Benitez, Claudio Ranieri and Marcelo Bielsa.
This was only Dyche’s second managerial role, having previously taken charge of Watford from 2011-2012.
Confirming Dyche’s departure, chairman Alan Pace said: “Firstly, we would like to place on record our sincere thanks to Sean and his staff for their achievements at the club over the last decade.
“During his time at Turf Moor, Sean has been a credit both on and off the pitch, respected by players, staff, supporters, and the wider football community.
“However, results this season have been disappointing and, while this was an incredibly difficult decision, with eight crucial games of the campaign remaining,
we feel a change is needed to give the squad the best possible chance of retaining its Premier League status.
“The process of replacing Sean has begun and further announcements will be made to supporters in due course.”
Burnley’s next game is against West Ham United on Sunday. They then face Southampton, Wolves, Watford, Aston Villa twice, Tottenham Hotspur and Newcastle United.