The Italian took over from Martin O'Neill in March but after no wins from their opening five Premier League matches he has now paid the price.
During his five months at the Stadium of Light, the 45-year-old saw his side win just twice - against Everton and Newcastle - collecting nine points from 12 league matches and scoring 11 goals while conceding 22.
At the end of last season, Di Canio was backed by the club's board to strengthen his squad - bringing in 14 players and spending over £23million in the process during the close-season.
A statement from the club on Sunday read: "Sunderland AFC confirms that it has parted company with head coach Paolo Di Canio this evening (Sunday).
"Kevin Ball will take charge of the squad ahead of Tuesday night’s Capital One Cup game against Peterborough United and an announcement will be made in due course regarding a permanent successor.
"The club would like to place on record its thanks to Paolo and his staff and wishes them well for the future."
