The former Liverpool defender has paid the price after a dreadful run of just three wins in 14 Bundesliga games for the Champions League hopefuls
The Bundesliga club have endured a woeful run of form, which has seen them pick up just three wins from their last 14 games, culminating in another defeat on Friday.
Reports have suggested youth coach Sascha Lewandowski will now take charge of the team until the end of the season, having previously worked with the first team last term.
Hyypia, 40, took charge of Leverkusen in May 2012 but has been heavily criticised since the turn of the year, with the club suffering a 6-1 aggregate defeat to Paris Saint-Germain in the last 16 of the Champions League.
Friday's defeat leaves the club with little chance of qualifying for the competition next term as they now sit in fourth place, six points adrift of third-placed Schalke.