His dismissal comes after he lost 2-0 to Southampton on Wednesday, which left the club19th in the Premier League, 10 points from safety with 10 games left.
Ranieri who led Leicester to an unlikely title triumph back in 2016, said in a statement: 'I am obviously disappointed with the recent results and that we could not build on the good start we made following my appointment.
'Finally, I would like to thank the club, the players and the fans for the support they have given me during my time at the club.'
Chairman of the club, Shahid Khan said in a statement: Following our discussion this afternoon, Claudio Ranieri agreed with my decision that a change was in the best interest of everyone,' chairman Shahid Khan said in a statement.
'No surprise to me, Claudio was a perfect gentleman, as always.
'Claudio’s tenure at Fulham didn’t produce the outcome we anticipated and needed when I appointed him as manager in November, but be assured he is not solely to blame for the position we are in today.
'Claudio walked into a difficult situation, inheriting a side that gained only one point in its prior eight matches, and he provided an immediate boost by leading our club to nine points in his first eight matches as manager.
'Though we were unable to maintain that pace thereafter, I am grateful for his effort. Claudio leaves Fulham as our friend and he will undoubtedly experience success again soon.'
Ranieri was due to take a recovery session on Thursday, but Scott Parker now takes over on an interim basis.
'Scott’s immediate assignment is merely to help us stabilise, grow and rediscover ourselves as a football club,' Shahid Khan continued. 'If Scott can answer that challenge, and our players respond to the opportunity, perhaps victories will follow in the months ahead.'
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