The Italian has been sacked after three-and-a-half-years at the Etihad Stadium and 12 months after guiding the club to their first league title in 44 years.
Mancini's City squad failed to defend their title this season with neighbours Manchester United exacting revenge whilst the club also struggled in the Champions League again and were surprisingly beaten by Wigan Athletic in the FA Cup final on Saturday.
"This has been a difficult decision for the owner, Chairman and Board to make and it is the outcome of a planned end of season review process that has been brought forward in light of recent speculation and out of respect for Roberto and his extensive contributions to the Football Club.
"Despite everyone's best efforts, the Club has failed to achieve any of its stated targets this year, with the exception of qualification for next season's UEFA Champions League. This, combined with an identified need to develop a holistic approach to all aspects of football at the Club, has meant that the decision has been taken to find a new manager for the 2013/14 season and beyond."
Assistant Manager Brian Kidd will take interim responsibility for the remaining two games of the season and the post-season tour to the United States.