The Argentine has been dismissed from his post after Saturday's 5-2 hammering at home to Real Sociedad compounded los Che's dismal run of form in La Liga
The 41-year-old had been under increasing pressure at Mestalla due to los Che's inconsistent Liga form, which included a 4-0 hammering against Malaga last week.
Valencia's form in the Champions League had given Pellegrino some breathing space, but, after his side's 5-2 capitulation at home to Real Sociedad on Saturday, the club have taken the decision to dismiss him from his post.
In a statement on the club's official website, president Manuel Llorente said: "After the match [with Real Sociedad], we had been exchanging views, and we have taken the decision to dismiss coach Mauricio Pellegrino.
"It was a decision which, as you can all imagine, was painful, but we think that within the scope of our responsibility, we have to take such decisions. In all the time I've been at Valencia, this is the first time we have removed a coach. I feel responsible, I'm the president.
"After analysis of the encounter and our form since we started the season, this is what had to be done. And it hurts a lot, because I have always held Mauricio in very high regard.
"The intention is that we take the team to the Champions League, it is our responsibility to take decisions to straighten our future. It is more comfortable not to take it, but we are obliged to."
The club also confirmed that their assistant coach Voro will take temporary charge of first-team affairs as they begin the search for Pellegrino's replacement.