Reading said that owner Anton Zingarevich felt a change was necessary in a bid to survive in the top flight after winning promotion last season.
A 2-1 defeat by fellow strugglers Aston Villa at the weekend left Reading level on 23 points with fast-improving bottom club Queens Park Rangers and four points short of fourth-bottom Villa with nine matches remaining.
"Owner Anton Zingarevich wishes to place on record his thanks to Brian who had achieved great success with the club since taking over as manager in December 2009," the club said.
"Brian gained promotion to the Premier League last year for only the second time in the club's history thanks to a remarkable run at the end of last season.
"However, in our current situation, [Anton Zingarevich] felt that a change was necessary."
The club said the search for former Arsenal midfielder McDermott's successor had already begun.
McDermott narrowly failed to get Reading into the Premier League in his first season in charge, reaching the play-off final where they lost to Swansea City, but a storming finish last year earned them automatic promotion.
Reading's decision to part company with McDermott took the number of top-flight managers to lose their jobs this season to four. Mark Hughes (Queens Park Rangers), Roberto Di Matteo (Chelsea) and Nigel Adkins (Southampton) were also sacked.
With QPR showing signs of life under Hughes's replacement Harry Redknapp, Reading will have their work cut out to survive, especially as their next two matches are away to leaders Manchester United and Arsenal.
They also host champions Manchester City and Liverpool before the end of the season.
