Meulensteen, the former Manchester United coach, was appointed head coach under Martin Jol, only to take control of first-team duties on December 1 following his compatriot's sacking. However, with the bottom-placed Londoners four points adrift of Barclays Premier League safety chairman Shahid Khan has wielded the axe again.
Magath has been installed as first-team manager on an 18-month contract, with Meulensteen confirming his exit from the club despite the club statement not mentioning his name.
The German Magath arrives with an impressive cv, having led Bayern Munich to successive Bundesliga titles in 2005 and 2006, before achieving the same feat with Wolfsburg in 2009.
Meulensteen, who only last Sunday led Fulham to a 2-2 draw at Manchester United and on Wednesday was only denied a similar draw against in-form Liverpool by a stoppage-time penalty, believes the decision to press the "panic button" was wrong. "I am very, very surprised, very disappointed, very frustrated as well," said the Dutchman.