Santiago Solari, the club’s B team coach, has been put in temporary charge.
The decision was announced following a meeting of Madrid’s board of directors on Monday night.
A club statement read: “This decision, adopted from the highest level of responsibility, aims to change the dynamics of the first team, when all the objectives of this season are still achievable.
“The Board of Directors understands that there is a great disproportion between the quality of the staff of Real Madrid, which has eight players nominated for the next Golden Ball, something unprecedented in the history of the club, and the results obtained to date.”
Solari will lead the first team from Tuesday and is expected to be in charge for the Copa del Rey game against Melilla on Wednesday.
Although former Chelsea boss Antonio Conte was been lined up to replace Julen Lopategui, but talks with the Italian was said to not be completed, The Argentine Solari would be in charge of the Real Madrid team for now.