Birmingham have parted company with their manager after a poor start to the season.
The Blues have won just two games this season and are just outside the relegation zone.
But it can hardly come as a shock to Clarky, who said his ambition was to manage Newcastle United.
He fended off relegation last season in the final seconds of the last campaign.
BCFC statement: "Birmingham City Football Club has parted company with Lee Clark and Steve Watson with immediate effect.
"The search for a successor has already begun and the board will look to make an appointment in the very near future.''