On the back of Paul Warne's switch to Derby County in September last year, Taylor left his job at Exeter City to make the switch to the New York Stadium.
The 41-year-old successfully kept the Millers in the Championship, finishing with 50 points from their 46 matches and six points clear of the bottom three.
However, Taylor has been unable to build on the progress that was made in 2022-23, Rotherham collecting just 11 points from 16 games this time around.
With just one victory - at home to Coventry City - in 11 outings and a 5-0 reverse at the hands of Watford at the weekend, the Rotherham hierarchy have opted for a change of direction.
Speaking to the club's official website, chairman Tony Stewart said: "It was felt by myself and the Board that we had to act now by making a managerial change in order to give ourselves the best possible chance of retaining our Sky Bet Championship status this season.
"We are grateful to Matt for his efforts over the course of the last year and it has not been an easy decision to make.
"It goes without saying that he leaves with the very best wishes of everyone here at Rotherham United."
In total, Taylor was able to win just 10 of his 55 matches in charge of the Yorkshire side, drawing 18 times and losing on the other 27 occasions.
Rotherham added that their search for a replacement is now underway, the assumption being that it will be concluded prior to their next match.
As a result of the international break, Rotherham are not back in action until they play host to Leeds United on November 24.