Pearce took the reins in the off-season, and Forest made a fine start to life in the Championship under his leadership.
However, after going unbeaten in their first 11 league matches of the campaign, their form has dipped alarmingly.
Forest have won just three and lost 10 of their subsequent 17 outings, including a 1-0 home reverse at the hands of struggling Millwall on Saturday.
Pearce's sacking was confirmed on Sunday, although the former England captain may not be departing the club altogether.
"After long discussions between owner and chairman Fawaz Al Hasawi and manager Stuart Pearce, the club has decided that Stuart will be relieved of his role as manager with immediate effect," read a brief statement from Forest.
"Mr Al Hasawi has offered Stuart an alternative role at the club, which he is currently considering.
"The club will be making no further comment at this time."
