The former Queens Park Rangers and Rangers boss has been relieved of his duties following the 2-1 loss against his predecessor, now-Birmingham boss Tony Mowbray, on Saturday.
The Black Cats sit 10th in the Championship and are four points off the play-offs.
Mike Dodds, who has been part of the club's coaching team since 2021, will now serve as interim head coach once again until the end of the season.
A statement released by Sporting Director Kristjaan Speakman on Monday said: "We are disappointed that Michael is leaving Sunderland AFC. Our desire is to improve and unfortunately that hasn't been evident, as such we take full accountability and feel that acting decisively is in the best interests of the Club.
"This has been a difficult few months for Michael, who leaves with our best wishes for the future. Our focus is now on the players and supporting Mike Dodds in the remaining games to ensure we achieve the highest possible league finish. We will be updating our supporters further as and when significant developments are made."
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Beale is understood to have lost the dressing room, with the Sunderland players particularly unhappy at being made to do extra training after a defeat, while the manager himself took the day off.
He took charge of 12 games after taking over in December, winning just four games in that time and losing six, including the 3-0 FA Cup defeat to fierce rivals Newcastle.
The 43-year-old - who played for Charlton as a youngster - began his coaching career with Chelsea, before moving onto Liverpool, Sao Paulo and then working as a first team coach at Rangers and Aston Villa with Steven Gerrard.
However, despite helping Rangers to win the title with Gerrard, stepping up to be the main man hasn't worked out for Beale so far. He was sacked by Rangers in October after his return to the club as no.1 and has now struggled to make it work at Sunderland.
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Back-to-back defeats for the Black Cats away at struggling Huddersfield and then away at Birmingham and the incident with Trai Hume appear to have put pressure on the Sunderland hierarchy to act.
There had been calls from a large majority of Sunderland fans for Beale to be sacked from very early on his tenure.
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Beale's predecessor Mowbray - who has had to temporarily step down from his role at St Andrew's - was sacked earlier in the season despite having the club sitting in ninth in their second season back in the second tier.
He also guided them to a sixth place finish in the 2022/23 following Alex Neil's departure.
Sunderland will be looking to get back to winning ways against Swansea at the Stadium of Light this Saturday.