The German champions were humbled 3-0 in their Champions League clash in Paris, and the Italian coach came under criticism for leaving Arjen Robben, Franck Ribery and Mats Hummels out of the starting XI.
The 58-year-old defended his tactics and selection for the game, telling reporters afterwards : "I know I will get criticism, that's fine. I thought it was a good line-up for this game."
However, he faced questions from the Bayern board over some of his decisions the next day, as German newspaper Sport Bild revealed that crisis talks with the higher-ups were scheduled on Thursday .
CEO Karl-Heinz Rummenigge did not make it easy on Ancelotti when he said the performance was "not Bayern Munich" and said the club needed to discuss it. Arjen Robben, meanwhile, refused to say whether the Bayern players still backed their boss .
"The performance of the team since the start of the season did not meet the expectations we put to them," Rummenigge said as the news of his sacking was made official on Thursday.
"The game in Paris clearly showed that there had to be consequences. Sporting director Hasan Salihamidzic and I gave Carlo an open and serious talk today and informed him of our decision.
"I would like to thank Carlo for his cooperation and regret this development. Carlo is my friend and will remain so, but we had to make a professional decision based on Bayern's interests.
"I now expect the team to have a positive development and absolute determination, so we can reach our goals for this season."
Former Bayern and France player Sagnol takes the helm on a short-term basis, despite having limited experience as a coach. The 40-year-old spent less than two seasons in charge of Bordeaux - his only senior coaching role - before returning to Germany to assist Ancelotti.
Ancelotti leaves with Bayern sitting three points behind Borussia Dortmund at the top of the Bundesliga after six games after suffering a 2-0 defeat to Hoffenheim and most recently losing a two-goal lead to draw with Wolfsburg.
The three-time Champions League winning coach signed a three-year contract when he took over at the Allianz Arena in 2016 as Pep Guardiola's replacement.
The former AC Milan star lifted the Bundesliga title at the only time of asking, but saw his side eliminated from the Champions League at the quarter-finals stage at the hands of Real Madrid. They also lost to Dortmund in the DFB-Pokal final last term.
Sagnol's first game as interim coach will be away to Hertha Berlin in the Bundesliga on Sunday.