The former Italy international and World Cup winner was appointed in mid-September as Lyon's successor to Laurent Blanc, whose tenure came to an end with a 4-1 home defeat to Paris Saint-Germain.
Les Gones - who were in a four-way title fight as recently as the 2020-21 season under Rudi Garcia - took just one point from their opening four games of the new term with Blanc at the helm, leaving them bottom of the table.
Grosso took the reins on a season-long contract with the option to extend until the summer of 2025, as the 46-year-old returned to the club whom he represented as a player between 2007 and 2009.
The erstwhile left-back had previously taken charge of Bari, Hellas Verona, Brescia, Sion and Frosinone, departing the latter at the end of the 2022-23 season after leading them to Serie A via winning the Serie B title.
While Grosso did manage to engineer Lyon's first and only win of the 2023-24 season to date - a surprise 1-0 victory away to Rennes on November 12 - the 46-year-old had only taken two points from his first five matches in charge.
Lyon returned to losing ways at the weekend with a 2-0 home beating at the hands of Lille, leaving the seven-time Ligue 1 champions rooted to the foot of the division with just seven points and nine goals scored.
As such, Lyon have pulled the trigger on Grosso and his coaching team, saying in a statement: "Taking into account the results obtained and after an in-depth analysis of the situation of the professional team, currently 18th in Ligue 1, Olympique Lyonnais has decided to implement a procedure which could lead to the termination of the employment contract of Fabio Grosso and of his deputies, Raffaelle Longo, Francesco Vaccariello, Vittorio Carello, and Mauro Carretta.
"Olympique Lyonnais would like to thank Fabio Grosso and his deputies for their involvement and professionalism since taking office at the head of the professional team."
Grosso's seven-game tenure marks the shortest-ever reign of a Lyon head coach, beating Sylvinho's 11-game stay in 2019, while he now joins Marcelino (Marseille) and Guy Roux (Lens) as having the most brief stay of any Ligue 1 manager.
The Italian's ill-fated stint at the Groupama Stadium also saw him require hospital treatment after the Lyon team bus was attacked en route to the Orange Velodrome for their derby with Marseille on October 29, which was pushed back to December 6.
Academy manager Pierre Sage has been placed in interim charge for Saturday's clash with Lens while the Lyon hierarchy scope out replacements, and current names on the Gones shortlist are believed to be Igor Tudor, Jorge Sampaoli and Bruno Genesio.