Ranieri’s dismissal comes three days after his Watford side suffered a dismal 3-0 defeat to relegation rivals Norwich City.
The Italian manager leaves Watford with the club sitting 19th in the Premier League, just two points off the foot of the table and two points from safety.
Watford are now looking for their third manager of the 2021-22 season after owner Gino Pozzo sacked former boss Xisco Munoz in October with the team 14th in the table.
The club said in a statement: ‘The Hornets’ board recognises Claudio as a man of great integrity and honour, who will always be respected here at Vicarage Road for his efforts in leading the team with dignity.
‘However the board feels that, with nearly half of the Premier League campaign remaining, a change in the Head Coach position now will give a new appointment sufficient time to work with a talented squad to achieve the immediate goal of retaining Premier League status.’
Ranieri, who won the Premier League with Leicester City, amassed just seven points from 13 games during his spell in charge at Vicarage Road.
While the greatest achievement in Ranieri’s managerial career came when he guided Leicester to a remarkable title in 2015-16, he has also had spells at west London rivals Chelsea and Fulham.
Watford travel to Turf Moor to face Burnley on February 5 following the Premier League’s mid-season winter break.
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