Heinze managed to win only two games in 13 matches, leaving the side 10th in the MLS Eastern Conference.
"This was certainly not a decision we wanted to make at this point in our season, but it was the right one for the club," said Atlanta president Darren Eales.
"Gabi is a talented coach and is undeniably passionate about his craft and the sport of soccer. We are grateful to him for his service and wish him all the best in the future."
The former Manchester United defender came under intense criticisms following a feud with Josef Martinez, the club's star player who was told to train alone.
Technical director for Atlanta United, Carlos Bocanegra refused to disclose the main reason that resulted to the sacking of the 43-year-old trainer.
"Our of respect for Gabi we're not going to air everything out,' Bocanegra said. 'We've had a number of concerning issues over the past several months and the process of evaluating them brought us to this decision today."
Heinze last game for Atlanta United was a 1-0 home defeat to New England Revolution.
The last time Atlanta United won the MLS title was in 2018, a feat they nearly repeated in the following year.
Assistant coach Rob Valentino will now be incharge as Atlanta's new interim head coach.
Heinze had previously managed Godoy Cruz, Argentios Juniors and Velez Sarsfield in his homeland.
Before Heinze's arrival, Atlanta finished 12th out of the 14 teams in the 2020 Eastern Conference.
Heinze was part of the Manchester United team that won the Premier League title in 2007 under Sir Alex Ferguson.
During his playing days, Heinze featured for clubs like Real Madrid, AS Roma, Paris Saint-Germain, Olympique Marseille, among others.
