First-team coach Michael Appleton will take over on a caretaker basis while a replacement is sought.
Di Matteo's assistant Eddie Newton and head of sports science Ade Mafe have left the club as part of the move.
Chairman Jeremy Peace said: "This has been a tough decision but we, as a board, believe it is the right one to give the club the best possible chance of remaining in the Barclays Premier League.
"Our poor sequence of results stretches back more than three months and there has been little sign of it coming to an end.
"If this run continues much longer, achieving our goal of retaining our Premier League status will become increasingly difficult. That is why we felt compelled to act now.
"This club's track record proves we do not take such decisions lightly, with Roberto being only our fourth manager or head coach in almost 11 years.
"We now begin the search to find a new head coach who will fit into our existing set-up and work under our sporting and technical director, Dan Ashworth, with a view to taking the club forward."