Robinson, the former Sheffield United and Bury chairman, departs after just under 18 months in the role and at a time when Leicester prop up the rest of the top flight and are five points adrift of safety.
A statement from the Midlands club on Sunday read: "Leicester City Football Club has terminated the contract of its Director of Football, Terry Robinson.
"He departs with immediate effect and with the best wishes of everyone at the football club.
"Current Academy Director Jon Rudkin will assume the responsibilities of Director of Football.
"Jon has been with Leicester City Football Club for 16 years, has headed the club's academy - recently awarded the Elite Player Performance Plan's Category One status - since 2003 and has an excellent understanding of the club's footballing philosophy and values.
"The owners, directors, management and staff at Leicester City would like to place on record our collective thanks to Terry for his work and contribution, and wish him well in the future."
