Cooper, who took charge in the summer after replacing Enzo Maresca, departs with the Foxes sitting two points above the bottom three, having managed just two wins in 12 matches.
The disappointing run, which included four consecutive league games without a victory, sealed his fate.
The club confirmed the decision in an official statement: “Leicester City Football Club has parted company with Steve Cooper, who leaves his position as First Team Manager with immediate effect.
“Assistant Manager Alan Tate and First Team Coach and Analyst Steve Rands have also left the Club. Steve, Alan, and Steve depart with our thanks for their contribution during their time with the Club and with our best wishes for the future.
“Men’s First Team training will be overseen by First Team Coach Ben Dawson, supported by coaches Danny Alcock and Andy Hughes, as the Club begins the process of appointing a new manager, which we hope to conclude as soon as possible.”
Cooper’s tenure began with optimism after Leicester’s promotion from the Sky Bet Championship as title winners.
However, the transition to top-flight football has proved challenging, with inconsistent performances leaving the Foxes struggling for form.
Saturday’s defeat against Maresca’s Chelsea further compounded Leicester’s difficulties, with the team now facing a critical period as they seek to avoid a battle for survival.
The search for a new manager is already underway, with the club eager to steady the ship and reignite their campaign.