Van Bronckhorst has paid the price for an underwhelming start to the season for Rangers which has seen them finish bottom of their UEFA Champions League group with zero points and a goal difference of -22 while domestically they have fallen nine points behind Celtic in the title race.
The Dutchman was hired in November last year after Steven Gerrard left for Aston Villa.
Van Bronckhorst led Rangers to win the Scottish Cup and reach the Europa League final which they lost on penalties to Eintracht Frankfurt.
A statement on their official website read: "The board would like to put on record sincere thanks to Gio for all his efforts since his appointment as manager.
"Arriving at the club just over a year ago, Gio led the club to a fifth European final and won the Scottish Cup last May. He also led the team to the club's first Champions League qualification in 12 years.
"Unfortunately, results and performances over recent months haven't met expectations and the decision was made today by the board to terminate the contract of the manager.
"The search for the new manager is now underway."
Rangers chairman Douglas Park added: "I want to thank Gio for the hard work he has put in over the last 12 months and, especially, the achievements of taking the club to the Europa League final and winning the Scottish Cup last season.
"Unfortunately, recent results have not met neither our nor Gio's expectations, and we have taken this difficult decision today. Everyone at Rangers wishes Gio every success in the future."
