"AC Milan wish to communicate that Massimiliano Allegri and his staff have been relieved of their duties with immediate effect", the Serie A club said in a statement.
"AC Milan would like to thank Mr Allegri and his staff for their time with the club and wish them the best for the future. Coach Mauro Tassotti will take charge of the team in the meantime."
Allegri was dismissed less than 24 hours after his team squandered a two-goal lead to lose 4-3 at promoted Sassuolo, conceding four times in just over half an hour.
The defeat left Milan languishing in 11th place in Serie A with 22 points from 19 games, 20 adrift of Napoli who occupy the Champions League playoff spot in third position.
Allegri's side have won only five league games all season.
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