The former Nottingham Forest boss was appointed in the summer after Enzo Maresca left the Championship title winners for Chelsea.
However, Cooper has lasted just 15 games in the job at the King Power stadium.
A 2-1 home defeat to Chelsea was the final straw and his exit confirmed just 24 hours later.
"Leicester City Football Club has parted company with Steve Cooper, who leaves his position as First Team Manager with immediate effect," a statement said.
"Assistant Manager Alan Tate and First Team Coach and Analyst Steve Rands have also left the Club.
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"Steve, Alan and Steve depart with our thanks for their contribution during their time with the Club and with our best wishes for the future.
"Men's First Team training will be overseen by First Team Coach Ben Dawson, supported by coaches Danny Alcock and Andy Hughes, as the Club begins the process of appointing a new manager, which we hope to conclude as soon as possible."
Cooper won just four of his 15 games across all competitions in charge at Leicester and leaves them 16th in the Premier League.
talkSPORT understands Leicester chairman Aiyawatt Srivaddhanaprabha had reservations about Cooper after appointing him in June.
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A lot of their players are also understood to have been unconvinced by the Welshman.
Furthermore, talkSPORT understands that Leicester's performances have been monitored for some time and the club felt they needed to act to maintain their Premier League status.
They wanted to give Cooper as long as possible but did not feel that he'd be able to overcome their issues in the time frame needed.
It is understood that a quick appointment is not expected but they were very keen on former Brighton and Chelsea boss Graham Potter in the summer.
Potter was close to taking charge of the Foxes in the summer before a last-minute hesitation on the part of the ex-Chelsea boss prompted them to appoint Steve Cooper instead.
After firing Cooper on Sunday, Leicester are expected to sound out Potter to see if he is interested in the job.
Other potential targets include former Manchester United interim-boss Ruud van Nistelrooy, who is keen to become a Premier League manager.
Cooper got off to a strong start in the Leicester dugout as they drew 1-1 at home to Tottenham on the opening weekend of the season.
However, they then went on a winless run of five matches in the Premier League to keep them lingering in the relegation mix.
Back-to-back wins over Bournemouth and Southampton have since been followed by four matches without victory.
This included a heavy 5-2 Carabao Cup fourth round defeat away to Manchester United, who then beat them 3-0 days later.
Saturday's defeat at home to Chelsea showcased the frailties within the Leicester squad amid poor defending for both of the visitors' goals.
The Foxes are only two points above the relegation zone and have just two league wins to their name from 12 matches.