"Penarol's board of directors has resolved that Gregorio Perez will not continue as coach of the yellow-and-black's senior squad," said the Montevideo club on its website.
The Observer newspaper said that Perez, whose previous spell in charge ended with a text message, learned his fate this time over the phone.
Perez took over in September following the resignation of Diego Aguirre, who led the team to the final of last season's Libertadores Cup where they lost to Santos.
Aguirre had resurrected the fanatically-supported team who won the Libertadores Cup five times but had gone into a long decline since their last triumph in 1987.
The 64-year-old Perez won Uruguayan titles in each of his previous four stints. Penarol have lost all three games since the mid-season break without scoring a goal.
Get the best features, fun and footballing frolics straight to your inbox every week.
Thank you for signing up to Four Four Two. You will receive a verification email shortly.
There was a problem. Please refresh the page and try again.