Wilder had been in charge of the Blades since May 2016 when they were in League One and took them to the championship in his first full season in charge.
Two seasons later Sheffield United gained promotion to the Premier League and finished in a respectable ninth position but their second season in the top flight has been anything but plain-sailing.
Sheffield have only secured four wins in the Premier League all season and look doomed for the Championship with 10 games left to play.
"Sheffield United confirms that Chris Wilder has left the Club by mutual consent," the Blades wrote in a statement released on the club's official website.
"The Board and Chris Wilder, who has managed the Blades to more than 100 wins in his almost five years at Bramall Lane, made the decision following discussions."
Wilder stated: "Being manager of Sheffield United has been a special journey and one I'll never forget. I was delighted to be given the opportunity back in 2016 and have been delighted with the success which we have achieved, including two promotions and a highest ever Premier League finish.
"I'd like to thank everyone who has contributed to the Club's accomplishments along the way, including the players, staff and, in particular, the supporters."
The club’s u-23 manager Paul Heckingbottom has been handed the reigns at Brammal Lane until the end of the season.
Sheffield travel to Leicester City in their next league outing later on Sunday.
