Fischer had been in charge of Union since the summer of 2018 and led them from the second tier to the top flight in his first season.
Union have played in the Conference League, Europa League and Champions League over the last three seasons but their results this term have been nothing to write home about.
Union Berlin have suffered 13 defeats in their last 14 matches and are bottom of the Bundesliga and their Champions League group, which features Real Madrid, Napoli and Braga.
"This is a very sad moment not only for me personally, but certainly for the entire Union family," said Union president Dirk Zingler.
"It hurts that we have not managed to break the negative run of recent weeks. I am grateful and proud when looking back on the time we have spent and the successes we have celebrated together.
"As painful as this separation is, Urs Fischer is leaving as a friend who will always be welcomed by us with open arms."
Fischer added: "The last few weeks have cost a lot of strength.
"We've tried a lot, and the team has put in a lot of effort, but it hasn't paid off in terms of results.
"I am very grateful for the confidence I have always felt here. Nevertheless, it feels right to make a change now.
"I wish Union all the best and am convinced that they will manage to stay in the league."
