Koeman was backed heavily during the transfer window, as Everton spent a reported £142 million on new players, but he has failed to deliver results this season and leaves the club 18th in the table.
The Merseyside club have flattered to deceive despite showing some early signs of promise, with the Toffees winning just once in the league since earning a 1-1 draw at title-hopefuls Manchester City in their second game of the season.
"Everton Football Club can confirm that Ronald Koeman has left the club," read a club statement released on Monday.
"Chairman Bill Kenwright, the board of directors and major shareholder Farhad Moshiri would all like to express their gratitude to Ronald for the service he has given to the club over the past 16 months and for guiding the club to seventh place in last season's Premier League campaign."
Koeman's side showed some fight when rescuing a late draw at Brighton on October 15, but the result did little to paper over the cracks.
And Sunday's result proved to be the final straw for Koeman, who departs just over 16 months after leaving Southampton for Goodison Park.
The 54-year-old – who won 19 and lost 16 of his 47 top-flight games at the helm – is the third Premier League manager to get the boot in 2017-18 following compatriot Frank de Boer's departure from Palace and Craig Shakespeare's dismissal at Leicester City.
Everton face Chelsea in the EFL Cup on Wednesday.
WHO WILL BE THE NEXT EVERTON MANAGER?
Prior to Koeman's widely anticipated departure, former Everton boss David Moyes had been linked with a return to Goodison Park. The Scot is currently without a job.
The current favourite with most bookmakers, though, is Burnley manager Sean Dyche.
Dyche kept the unfashionable Clarets in the Premier League last term after winning promotion for a second time and has continued to impress this season, with Burnley sitting in eighth place after nine matches.
The other contenders are mostly unemployed, with no compensation needed to prise them away.
David Unsworth, who is currently the coach of Everton's Under-23 side, is expected to take interim charge and may have a chance to audition for the job on a permanent basis.
Sam Allardyce could be tempted out of retirement for the Toffees gig while the wealth of owner Farhad Moshiri has resulted in big names such as Carlo Ancelotti and Thomas Tuchel being mentioned as possibilities.