Wolfsburg sacked its English coach Steve McClaren on Monday, with the club battling against relegation from the Bundesliga.
"We were no longer convinced that we could finish the season with stability by working together with Steve McClaren," the Wolfsburg general manager Dieter Hoeness said on the club's website.
"We tried it together until the last day. Unfortunately we have now lost the belief in success."
Assistant coach Pierre Littbarski is to take control of team affairs, the club said.
Wolfsburg, the 2009 champion, is currently 12th in the German league with 23 points, one point above the relegation zone.
The club lost 1-0 at Hannover at the weekend, and has won just once in its last 11 league games. It was also eliminated from the German Cup, losing 3-1 at home to second-division side Energie Cottbus in December.
Former England coach McClaren was lured from FC Twente last year after he won the Dutch championship.
McClaren had two successful years in Enschede after a dismal record as manager of England during its failed effort to qualify for the 2008 European Championship.
The 49-year-old McClaren was manager of Middlesbrough for five seasons before taking charge of England, winning the club's first ever trophy with victory in the 2004 League Cup final.
His is the fifth manager to lose his job in the Bundesliga this season, with Stuttgart responsible for two after the sackings of Christian Gross and his replacement, Jens Keller. Cologne fired Zvonimir Soldo in October and Hoffenheim parted ways with Ralf Rangnick in January.
Littbarski's first game in charge is at home to eighth-place Hamburger SV on Saturday.