The former Manchester United defender was appointed manager at the Stadium of Light in the summer of 2009, having previously filled the hot seat at Sheffield United, Huddersfield Town, Crystal Palace, Birmingham City and Wigan Athletic.
Despite leading the Black Cats to their highest league finish in a decade last term, the 50-year-old has come under increasing pressure in recent months, with the Wearsiders winning just two of their opening 13 Premier League outings.
Saturday's dramatic defeat to Wigan perhaps went a long way to sealing Bruce's fate, with the club's fans reacting furiously at the final whistle, with much of their ire aimed at the manager.
"This has been a difficult time for everyone at Sunderland and is not a situation that any of us envisaged or expected to be in," chairman Ellis Short said in a statement on the club's official website.
"It is my job as chairman to act in the best interests of our football club at all times and I can assure everyone that this is not a decision that I have taken lightly. Sadly results this season have simply not been good enough and I feel the time is right to make a change.
"Steve has acted with honesty and integrity throughout, which is testament to the character and commitment he has shown during his time at Sunderland.
"I would like to personally place on record my thanks to him for his significant contribution to our football club over the past two and a half years and everyone here at Sunderland naturally wishes him the very best for the future.
"I would also like to thank our fans, who have endured a trying start to the season. Their support continues to be the driving force behind our club and is vital as we now look to the future."
Sunderland currently sit in 16th place in the Premier League, and travel to fellow strugglers Wolverhampton Wanderers on Sunday in their next match.
