First-team coach Keith Millen will take temporary charge for the Eagles' opening Barclays Premier League match against Arsenal on Saturday.
Pulis was appointed manager in November and led Palace to survival, an achievement that earned him the Premier League manager of the season award just three months ago.
The Eagles picked up just seven points from their opening 12 games but Pulis' arrival instigated a remarkable turnaround as the team finished 11th in the table and 12 points clear of the drop.
Pulis' departure reportedly stems from disagreements with co-chairman Steve Parish over the club's transfer policy.
Palace have so far signed Martin Kelly from Liverpool, Fraizer Campbell from Cardiff and Brede Hangeland from Fulham but failed to finalise deals for the likes of Gylfi Sigurdsson, who returned to Swansea, and Steven Caulker, who joined QPR.