Allardyce was relieved of his duties along with his assistant Neil McDonald by the club's new owners, the Venky's Group from India.
Blackburn have lost three out of their last five games, including a 2-1 defeat by his former club Bolton on Sunday.
Rovers are currently 13th in the Premier League, five points above the relegation zone.
Current first-team coach Steve Kean will take temporary charge of the club.