Smith has paid the price for Villa’s recent poor run of form which has seen them lose each of their last five Premier League games, including last Friday’s 1-0 reverse at Southampton.
Smith took over Aston Villa in October 2018 following the sacking of Steve Bruce, and the former Brentford manager quickly guided the club back to the Premier League at the first time of asking via the play-offs.
The 50-year-old helped Villa retain their top flight status in their first season back and improved with an eleventh place finish last term.
However, the departure of Jack Grealish to Manchester City in the summer has seen them struggle, with new signings Emiliano Buendia, Leon Bailey and Danny Ings yet to really get going.
Villa chief executive Christian Purslow said: "After a good start to last season, this year we have not seen the continuous improvement in results, performances and league position which we have all been looking for.
"For this reason we have decided to make a change now to allow time for a new head coach to make an impact.
"The process of replacing Dean will now begin and the club will update supporters in due course."
Purslow added: "When Dean joined us in October 2018 our team was really struggling in the Championship. He immediately transformed the atmosphere and performances and achieved the ultimate success of leading Villa back to the Premier League within the same season - a rare feat.
"The board would like to sincerely thank Dean for his many excellent achievements, on and off the pitch, during this time.
"Everyone knows how much Aston Villa means to Dean and his family. He has represented the club with distinction and dignity - universally liked and respected by everybody associated with Aston Villa - our staff, players and supporters alike. We wish him the very best."
Smith is the fifth Premier League manager to be sacked this season after Xisco Munoz, Nuno Esperito Santo, Steve Bruce and Daniel Farke.
