The 60-year-old boss had been under intense pressure after a series of negative results left the club languishing in eighth place in the Serie A table, 10 points shy of the Champions League qualification places.
Earlier on Monday, president Massimo Moratti gave Ranieri a vote of confidence, but the Italian coach fell victim to Sunday's 2-0 Derby d'Italia defeat to Juventus, which was Inter's eighth loss since the start of the calendar year. He will be replaced by youth team boss Andrea Stramaccioni, who recently led the Primavera side to the NextGen Series title by overcoming Ajax in the final on penalties after a 1-1 draw.
"President Moratti and all of Inter would like to thank Claudio Ranieri and his staff for the professionalism and the commitment shown in these months," read a statement from the club.
"Inter would also like to announce that it has entrusted the team to Primavera coach Andrea Stramaccioni, who won the first edition of the Next Generation Series."
Ranieri arrived at San Siro in September following the sacking of Gian Piero Gasperini and oversaw the team's recovery in form as the Nerazzurri moved from a shocking 17th place to the European qualification zone.
However, a nine-game winless streak raised doubts over his future as Inter risk not competing in Europe next season, while they are already out of the Champions League after losing to Olympique de Marseille after a 2-2 aggregate on the away goal rule.
It is believed that Stramaccioni will guide Inter until the end of the season as the club seek to ensure a seamless transition to a new coaching staff, which reports suggest will be led by former Chelsea trainer Andre Villas-Boas.
Napoli's Walter Mazzarri and Udinese's Francesco Guidolin have also been linked with Inter's hot seat in recent weeks, but both coaches have distanced themselves from the reports.
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