A 2-0 loss to fellow strugglers West Ham United on Saturday saw the Toffees sink to 19th position on the Premier League table.
Everton have only recorded three wins from 20 top flight games this season.
Lampard was appointed by Everton as a replacement for Rafael Benitez at the back end of January last year, with the Merseysiders hovering just outside the relegation zone.
The former Chelsea boss managed to keep them up and there was optimism that they would kick on this term but results have been poor.
Their last victory came against Crystal Palace in October and they have also been knocked out of both domestic cup competitions.
"Everyone at Everton would like to thank Frank and his coaching staff for their service during what has been a challenging 12 months," a club statement read.
"Frank and his team's commitment and dedication have been exemplary throughout their time at the club, but recent results and the current league position meant this difficult decision had to be taken.
"We wish Frank and all his backroom team well for their future in the game. The club has started the process to secure a new manager and will provide updates on the appointment in due course.
"Paul Tait and Leighton Baines will take training until a new manager is appointed."
Whoever replaces Lampard will be Everton's sixth manager in the last five years.
The likes of Nuno Esperito Santo, Marcelo Bielsa and Sean Dyche are early frontrunners to replace Lampard at Goodison Park.
Lampard is the Premier League's sixth managerial casualty this season after Scott Parker, Thomas Tuchel, Bruno Lage, Steven Gerrard and Ralph Hasenhuttl.
