Schalke are on a treacherous run of form; stretching back to last season, the Royal Blues have not won in any of their last 18 Bundesliga games.
Schalke opened the 2020/2021 campaign with a humiliating 8-0 defeat to champions Bayern Munich last week and followed that up with another 3-1 loss at home to Werder Bremen on Saturday.
Wagner took over Schalke before the start of the 2019/2020 season after leaving Huddersfield Town but despite a bright start to the campaign, the Veltens Arena outfit tailed off miserably to end the campaign in 12th place.
"We had all hoped that we could improve on the pitch together with David Wagner. Unfortunately, we haven't seen the right performances and results from the first two games of the season for this to happen," said Jochen Schneider, Schalke's head of sport.
"We have therefore decided to make a fresh start. Despite the disappointing results, this wasn't an easy decision for us to make.
"I would like to thank David Wagner, Christoph Buhler and Frank Frohling, who, up until their departure, have done everything they can to get Schalke back on track."
Schalke are next in action against Champions League semi-finalists RB Leipzig next weekend.
