Gartside lured Coyle away from local rivals Burnley in January 2010 to replace Gary Megson but has moved to dispense with the 46-year-old after a poor start to the season in the Championship.
The Trotters have won only three of their 10 games in England's second tier since being relegated from the Premier League in May and Coyle has paid the price.
“I have always been driven to act in the best interests of the club and care passionately about it," he told the club's official website.
“I had fantastic times as a player here and it has been a privilege to have held the post of manager.
“I want to thank the fans for their backing since I returned, chairman Phil Gartside and owner Eddie Davies for their support and friendship, the club’s staff and players for all their effort and commitment.
“I wish everyone connected with Bolton Wanderers all the very best.”
Attentions will now focus on finding a suitable replacement but Gartside paid tribute to the Scot upon his departure.
“Owen poured his heart and soul into the job on and off the pitch," Gartside said. "He led our club with great dignity during some very challenging times.
“It is the right time for a change. We set a target at the beginning of the season and want to get back on track.
“I would like to place on record our sincere thanks to Owen, Sandy Stewart and Steve Davies for all their hard work for Bolton Wanderers.”Youth team coaches Jimmy Phillips and Sammy Lee, who was sacked as Bolton manager five years ago, will step in to take charge of the first team on a temporary basis.