The former Celtic manager took charge of the Premier League club last month but failed to secure a single victory.
His dismissal comes after Forest's 3-0 home defeat to Chelsea.
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A statement read: "Nottingham Forest Football Club can confirm that after a series of disappointing results and performances, Ange Postecoglou has been relieved of his duties as head coach with immediate effect.
"The Club will make no further comment at this time."
Postecoglou joined Forest after leaving Tottenham Hotspur in the summer, where he won the Europa League with the North London club last season.
The 60-year-old Australian boss previously managed Celtic, clinching five out of six possible domestic honours during his tenure.
With his future now uncertain, it remains to be seen where Postecoglou will end up next.