The Premier League club announced the news on their official website, a day after their 5-0 home defeat to Liverpool.
That loss appears to have been the final straw for the White Hart Lane board, with the club saying in a brief statement: "The club can announce that agreement has been reached with Head Coach, Andre Villas-Boas, for the termination of his services.
"The decision was by mutual consent and in the interests of all parties."
After the humiliation by Liverpool, which followed a 6-0 drubbing by Manchester City last month, Villas-Boas had insisted that he would not quit.
The 36-year-old said: "The call to make that decision is not mine, because obviously I won't resign and I'm not a quitter.
"The only thing I can do is work hard with the players to get them back on track.
"This is a top-four squad but in our Premier League form we are not there."
Spurs are currently seventh in the table, two points ahead of Manchester United, and won their Europa League group with a 100 per cent record, scoring 15 goals and conceding just two in six games.
Villas-Boas also had a good record overall as Tottenham manager, averaging 1.83 points per league match, the highest of all Spurs bosses in the Premier League era.
The Portuguese manager did however spend heavily over the summer, to the tune of £108million with seven new players coming in as Tottenham reinvested Gareth Bale's enormous transfer fee.
A bright start in the Premier League was not maintained however and it appears the manner of the defeats by City and Liverpool proved too much for Spurs chairman Daniel Levy and the board.
Earlier, Harry Redknapp - sacked as Tottenham manager in 2012 after failing to qualify for the Champions League - had said Levy should give his successor Villas-Boas more time.
Redknapp told talkSPORT: "I think people are over-reacting too quickly. You lose a couple of games now and you're in trouble, it shouldn't be like that.
"You either think somebody is good at their job or not and when you appoint someone you should give them time and let them do the job."