The 48-year-old’s future had been the subject of intense scrutiny over the last few days.
Mancini learned tonight he had been relieved of his duties after failing to achieve any of the club’s “stated targets” for the season.
The news comes exactly a year to the day after City won the Premier League in dramatic circumstances on the final day of last season.
But it is Mancini’s failure to build on that achievement that has seen his three-and-a-half year tenure brought to an end.
Despite everyone’s best efforts, the club has failed to achieve any of its stated targets this year, with the exception of qualification for next season’s UEFA Champions League.
A club statement read: “It is with regret that Manchester City Football Club announces that Roberto Mancini has been relieved of his duties as Manchester City manager.
“This has been a difficult decision for the owner, chairman and board to make and it is the outcome of a planned end-of-season review process that has been brought forward in light of recent speculation and out of respect for Roberto and his extensive contributions to the football club.
“Despite everyone’s best efforts, the club has failed to achieve any of its stated targets this year, with the exception of qualification for next season’s UEFA Champions League.
“This, combined with an identified need to develop a holistic approach to all aspects of football at the club, has meant that the decision has been taken to find a new manager for the 2013/14 season and beyond.”
City’s statement added that assistant manager Brian Kidd would be placed in interim charge for the remaining two matches of the season and the forthcoming tour of the United States.
Malaga coach Manuel Pellegrini is the favourite to take over full time, having been linked heavily with the post since last Friday night.
Despite a disappointing season, Mancini will leave with a fine record having won the FA Cup in 2011 and last season’s first title win in 44 years.
City chairman Khaldoon Al Mubarak said: “Roberto’s record speaks for itself and he has the respect and gratitude of Sheikh Mansour, myself and the board for all of his hard work and commitment over the last three and a half years. He has clearly also secured the love and respect of our fans.
“He has done as he promised and delivered silverware and success, breaking the club’s 35-year trophy drought and securing the title in 2012. I would like to personally and publicly thank him for his dedication to the progress that he has overseen and for his support and continued friendship.”
Roberto Mancini: Factfile
1964: Born on November 27, Jesi, Italy.
1981: Makes debut for Bologna as 17-year-old. Scores nine goals in 30 matches in first season.
1982: Signs for Sampdoria. Scores four goals in 22 matches in his first season.
1985: Helps Samp to Coppa Italia triumph.
1988: Wins second Coppa Italia.
1989: Wins third Coppa Italia.
1991: Sampdoria win Scudetto for first time in club’s history, scoring 12 goals.
1994: Wins fourth Coppa Italia with Samp.
1998: Helps Lazio win Coppa Italia.
1999: Wins second European title of his career as Lazio defeat Real Mallorca 2-1 in Cup Winners’ Cup final.
2000: Announces retirement after career which saw him represent Italy 36 times. Joins Lazio’s coaching staff as Sven-Goran Eriksson’s number two.
2001: January – Eriksson resigns and Mancini announces he will follow the coach out of the Stadio Olimpico. Makes playing comeback with Leicester, making five appearances for club.
March 7 – Returns to coaching, taking charge of Fiorentina.
June 13 – Earns first coaching honour as Fiorentina beat Parma in Coppa Italia final.
2002: January 11 – Resigns as Fiorentina coach with club second-bottom of Serie A.
May 9 – Lazio part with Alberto Zaccheroni and appoint Mancini as new coach.
2003: June – Lazio finish fourth in Serie A and qualify for the Champions League.
2004: May – Wins Coppa Italia, defeating Juventus 4-2.
July 7 – Takes over as coach of Inter Milan following resignation of Alberto Zaccheroni in June.
2005: Leads Inter to Coppa Italia and Italian Supercup glory.
2006: Again leads Inter to Coppa Italia and Italian Supercup triumphs. Inter also awarded Scudetto after Juventus and AC Milan are stripped of points due to match-fixing scandal.
2007 – Guides Inter to successful defence of Serie A title.
2008: March 11 – Announces he plans to leave Inter at end of season at post-match press conference following his side’s Champions League exit at hands of Liverpool.
March 12 – Reverses his decision to leave Inter.
May 18 – Guides Inter to third consecutive Scudetto.
May 29 – Inter sack Mancini. A settlement between the two parties is finally reached in October 2009, prior to which Mancini is unable to take up a managerial position elsewhere.
2009: December 19 – Manchester City confirm the sacking of manager Mark Hughes, and announce the appointment of Mancini as his replacement on a three-and-a-half-year deal.
2011: May – After bringing in the likes of David Silva and Yaya Toure in a pre-season spending spree, City finish third in the Premier League, securing qualification to the Champions League for the first time.
May 14 – Leads City to their first major silverware in 35 years as Yaya Toure’s goal secures a 1-0 victory over Stoke in the FA Cup final.
December 7 – City crash out of the Champions League in the group stage after finishing third behind Napoli and Bayern Munich in Group A.
2012: March 15 – City again exit the Europa League in the last 16, going down on away goals to Sporting Lisbon.
May 13 – City clinch their first league title in 44 years as Sergio Aguero’s dramatic late winner against QPR sees Mancini’s men pip Manchester United to top spot on goal difference.
July 9 – Agrees a new five-year contract at City, keeping him at the club until 2017.
September 25 – Bow out of the Capital One Cup with a 4-2 home defeat at the hands of Aston Villa.
December 4 – Champions League campaign ends without a single win in Group D – with the bottom placing meaning they miss out on Europa League action.
2013: April 22 – Manchester United regain their Premier League title from City.
May 11 – Lose FA Cup final 1-0 to Wigan.
May 13 – Sacked as City manager.
Mancini: Manchester City record
Check out Roberto Mancini’s record at Manchester City following the Italian’s sacking on Monday evening.
Premier League: 133 games, 82 wins, 27 draws, 24 losses. Win percentage: 61.7 per cent.
FA Cup: 19 games, 13 wins, three draws, three losses. Win percentage: 68 per cent
League Cup: Nine games, four wins, one draw, four losses.Win percentage: 44.4 per cent.
Champions League: 12 games, three wins, four draws, five losses.Win percentage: 25 per cent.
Europa League: 16 games, 10 wins, three draws, three losses.Win percentage: 62.5 per cent.
Community Shield: Two games, one win, one loss. Win percentage: 50 per cent.
Overall: 191 games, 113 wins, 38 draws, 40 losses.Win percentage: 59.2 per cent.