Mourinho was appointed in 2016 and won the League Cup and Europa League in his first season in charge but failed to deliver any silverware last term, losing in the FA Cup final and finishing runners-up to Manchester City in the Premier League.
However, this season the Red Devils find themselves in sixth in the Premier League approaching the midway point, with Sunday's 3-1 defeat to leaders Liverpool leaving them 19 points off top spot, while they are 11 points behind fourth-placed Chelsea.
Issues off the field, including a public bust-up with record signing Paul Pogba, have further weakened the ex-Chelsea boss' position and the club have now decided to act by axing the Portuguese, who penned a new contract with United in January which was due to last until the end of the 2019/20 season.
"The club would like to thank Jose for his work during his time at Manchester United and to wish him success in the future," said a club statement.
"A new caretaker manager will be appointed until the end of the current season, while the club conducts a thorough recruitment process for a new, full-time manager."
Carrick - who was part of Mourinho's coaching team - will be caretaker manager in the meantime, while ex-Real Madrid coach Zinedine Zidane is the early favourite to takeover from Mourinho on a permanent basis.