Ivic was only appointed in August to replace Nigel Pearson, who was sacked with two games remaining in the Premier League last season.
Ivic was charged with returning Watford to the top flight following last season’s relegation but a 2-0 defeat to Huddersfield Town on Saturday left the Hornets in fifth place, nine points behind leaders Norwich City.
Ivic won nine of his 20 championship games in charge at the Vicarage Stadium, drawing seven and losing four. He was named as the Championship’s manager of the month for November.
Whoever takes charge of Watford will be the club’s fifth manager in a year. In addition to Pearson and Ivic, Javi Gracia and Quique Sanchez Flores have all been dismissed in the last 12 months.
"Watford FC confirms the departure of head coach Vladimir Ivic with immediate effect," read a statement on the club's website. "Ivic's coaching staff will also be leaving Vicarage Road.
"The Hornets thank Ivic and his staff for their efforts this season and wish them well for future success elsewhere."
Ivic was previously in charge of Israeli side Maccabi Tel Aviv, where he won two league titles before departing in July. He also won the Greek cup whiles in charge of PAOK in the 2016/2017 season.
As a player, the 43-year-old featured eight times for the Serbia and Montenegro national team.
