Bruce had been manager for the Black Cats since joining from Wigan in the summer of 2009.
Assistant manager Eric Black will be in charge of first team duties at the Stadium of Light until a new manager has been named.
Sunderland chairman Ellis Short told the club's official website: "This has been a difficult time for everyone at Sunderland and is not a situation that any of us envisaged or expected to be in.
"It is my job as chairman to act in the best interests of our football club at all times and I can assure everyone that this is not a decision that I have taken lightly. Sadly results this season have simply not been good enough and I feel the time is right to make a change.
"Steve has acted with honesty and integrity throughout, which is testament to the character and commitment he has shown during his time at Sunderland.
"I would like to personally place on record my thanks to him for his significant contribution to our football club over the past two and a half years and everyone here at Sunderland naturally wishes him the very best for the future.
"I would also like to thank our fans, who have endured a trying start to the season. Their support continues to be the driving force behind our club and is vital as we now look to the future."