McLeish, who suffered relegation with Villa's arch rivals Birmingham City last season, was never a popular choice with the fans and he struggled to win them over during a campaign in which his side won only seven of 38 league matches.
A statement on Villa's website said that McLeish's contract has been terminated with immediate effect.
"The club has been disappointed with this season's results, performances and the general message these have sent to our fans," it said.
"The board wishes to assure supporters that we are conscious in every sense that Villa expects and deserves more and we will strive to deliver this."
Villa chairman Randy Lerner said: "We need to be clear and candid with ourselves and with supporters about what we have lacked in recent years.
"Compelling play and results that instil a sense of confidence that Villa is on the right track have been plainly absent.
"The most immediate action that we can take is to look carefully at our options in terms of bringing in a new manager who sees the club's potential and embraces our collective expectations."
Villa suffered a woeful run of form in the Premier League, finishing in 16th place, two points above relegated Bolton Wanderers, and ending with a 2-0 defeat at Norwich City that earned a stinging rebuke from the Scot.
"That was an unacceptable performance in Aston Villa colours," McLeish, whose side failed to win any of their last 10 league matches told the club's website. "I have to change that. There will be change."
Wigan Athletic manager Roberto Martinez was in the frame for the Villa job before it was offered to McLeish last year and after another stirring finish to the season for his side he will be among the favourites to take over.
