West Brom lost 1-0 at Cardiff City earlier in the day, their fourth defeat in a row, with the club pinning Clarke's departure on a run of just seven wins from 34 league games in 2013.
The Scot took the reins at The Hawthorns in June 2012, replacing England boss Roy Hodgson, and led the club to a fine eighth-placed finish in the top flight last term.
And the former Chelsea, Liverpool and Newcastle coach believes those successes came back to haunt him, with the club sitting just two points above the relegation zone upon his sacking.
A statement published through the League Managers' Association read: "I believe I have unfinished business at West Bromwich Albion Football Club so it is with deep regret that I was relieved of duties as head coach.
"Going into this season expectations were high, perhaps unrealistically so, but with it still being only our fourth consecutive season in the top flight, our primary objective had to be to establishing our status in the Premier League.
"I was, and remain convinced that we were well placed to achieve this aim.
"It has been an honour to manage this club and I would like to thank the staff who have assisted me in every possible way as well as the fans who have been tremendous throughout.
"Now, I wish everyone connected with the club the very best for the future."
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