The Spaniard succeeded Zinedine Zidane in June but the crushing 5-1 El Clasico defeat by Barcelona on Sunday was their fifth loss in six games.
Real, Champions League winners for the past three years, are ninth in La Liga after their worst start since 2001-02.
The 52-year-old will be "provisionally replaced" by ex-player Santiago Solari, coach of B team Castilla.
Lopetegui took a training session on Monday but his fate was confirmed following a board meeting.
A club statement said "there is a great disproportion between the quality of the staff of Real Madrid" and "the results obtained to date".
Eight of the current Real squad are on the 30-man shortlist for the 2018 Ballon d'
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