The Hammers finished fourth from bottom, five points above Burnley, and owners David Sullivan and David Gold have decided a change in manager was needed.
The search for a successor to Zola starts immediately.
A club statement said: "West Ham have terminated the contract of Gianfranco Zola.
"The board of directors would like to thank him for his contribution and wish him well for the future.
"West Ham will now be focusing on seeking a replacement. No further comment will be made on this matter."