The head coach, 49, was axed by the Lisbon side after an embarrassing Champions League 3-2 defeat at home to Azerbaijan outfit Qarabag on the opening night of the premier European competition.
Things looked assured for Lage and his side at their Estadio de Luz home as Benfica raced into a 2-0 lead inside 16 minutes, with Villa loanee Enzo Berrenechea on target for the opener.
But the unfancied visitors staged a remarkable fightback. Qarabag pulled one back before the interval and struck to equalise a few minutes after half-time.
With the clash in the balance, Oleksiy Kashchuk struck four minutes from time to condemn Benfica to defeat and Lage to the end of his second tenure in charge at the club.
Lage had guided Benfica to three wins and a draw from the first four domestic Liga Portugal fixtures. They currently sit sixth, with the five sides above them having played one game more.
Multiple Premier League-winner Mourinho is reportedly in line to take over the hotseat at Benfica, with the club's next Champions League fixture away at Chelsea on September 30, where Mourinho won three English top flight titles across two spells. Mourinho's first job in management was with Benfica 25 years ago. He was sacked by Fenerbahce in Turkey last month.
For former Wolves boss Lage it is a second axing since he was removed from post at Molineux in October 2022. He was dismissed by Botafogo in Brazil after less than three months at the helm in October 2023. Lage was appointed for a second spell at Benfica on September 5 last year.
His spell at the Molineux helm, having replaced compatriot Nuno Espirito Santo in June 2021, lasted a little over a year and resulted in 19 wins from 51 matches. He was sacked with Wolves 18th in the Premier League and eventually replaced by the permanent appointment of Julen Lopetegui the following month.