The Scot was sacked 34 months after succeeding Gary Megson as manager at Bolton.
Bolton were relegated from the Premier League in May and have managed just three victories in 10 games this season.
Bolton chairman Phil Gartside said: "It is the right time for a change. We set a target at the beginning of the season and want to get back on track.
"Owen poured his heart and soul into the job, and he led our club with great dignity during some very challenging times. I would like to place on record our sincere thanks to Owen, Sandy Stewart and Steve Davis."
Coyle said: "I have always been driven to act in the best interests of the club and care passionately about it. I had fantastic times here as a player and it has been a privilege to have held the post of manager."