The Seasiders have parted company with the former Blackburn and MK Dons boss after losing nine of their last 10 matches, with Barry Ferguson taking over first-team duties
The former England international was understood to have held crisis talks with chairman Karl Oyston after a run of 10 matches without a win, losing nine of those encounters.
The Tangerines' poor form has seen them slip to 14th place in the Championship table, losing pace in the race for a play-off spot and sitting just eight points above the relegation zone.
Blackpool have therefore decided to part company with his Ince and several members of his backroom staff and, in the 46-year-old's absence, midfielder Barry Ferguson has been placed in charge of training.
A statement from the club read: "Blackpool Football Club can confirm that manager Paul Ince and assistants Alex Rae and Steve Thompson have had their contracts terminated with immediate effect.
"Barry Ferguson will take charge of training when the players return on Thursday.
"A further announcement will be made in due course."
Questions had been raised regarding Ince's management of the side after Michael Chopra had taken to Twitter to criticise his manager's absence from training - the striker was later fined £10,000 by the club.
Ince's departure also puts the future of his son, Tom, in doubt. The 21-year-old Blackpool winger, who is represented by his father, has been heavily linked with a January move away from Bloomfield Road.