That defeat saw the Heart extend a woeful run of form to 17 successive games without a victory, and remain rooted to the foot of the A-League table, with crowds dwindling and little hope of salvaging anything from the 2013-14 season.
According to a statement released by the club, Heart officials have opted to axe former Socceroo striker Aloisi after talks late on Saturday.
"John has been an absolute professional at our club; as an inaugural player, as a coach of our National Youth League side and as head coach of our Hyundai A-League team," Chairman Peter Sidwell said.
"No one can question his professionalism while at Melbourne Heart FC, nor his significant contribution to this club since its inception. I have spoken with John and he was gracious and understood the club's decision.
"We have the greatest respect for the commitment he made to Melbourne Heart FC and the dignified manner in which he has carried himself through a difficult period.
"We wish John and his family the best for the future and thank him for his valuable contribution to our club."
The 37-year-old succeeded John van 't Schip in the top job at the beginning of last season and the Dutchman, who rejoined Heart in a technical advisory role in August, is in the frame to resume control on a temporary basis.
Heart confirmed on Saturday they are in 'on-going discussions' with a consortium interested in buying the club for a reported fee of AU$12 million.
