After an uninspiring 3-0 Premier League defeat to West Ham on Saturday, the Dutchman leaves Craven Cottage, with countryman Rene Meulensteen promoted to assume his duties.
The former Tottenham boss had long been under pressure for an uninspiring start to the season and speculation over his future increased after his compatriot was recruited to work alongside him on November 13.
After defeat to the Hammers, Fulham finds itself in the Premier League relegation zone with 10 points after 13 games, its only victories coming against fellow strugglers Sunderland, Stoke City and Crystal Palace.
"Today I spoke with Martin to thank him for his efforts on behalf of Fulham over the past three seasons and, in particular, since my becoming chairman earlier this year," owner Shahid Khan wrote in a club statement released Sunday. "Martin was very gracious, and I appreciate his understanding of the situation. There is no question Martin is an excellent football man and he has my utmost respect for the commitment he made to our club.
"However, our poor form and results this season are undeniable and Fulham supporters deserve better. With more than half the season still ahead, an immediate change was necessary.
"Rene Meulensteen was brought to Fulham to assist Martin and today was offered the challenge and opportunity to step in for Martin. I thank Rene for accepting and now we move forward. I have great confidence in Rene and high expectations for our squad to respond."
"I appreciate the faith Mr. Khan has put in me and will do my very best to honor his trust. We aim to get Fulham back on track, starting Wednesday night [against Tottenham]," Meulensteen said in the statement.