The club announced the news in a press conference on Sunday, carried on their social media channels.
Dortmund chief executive Hans-Joachim Watzke said: “Last night, in a conversation with Peter Bosz, we decided that we would release him with immediate effect. It was very emotional, but also respectful.
“On behalf of all at Borussia, I would like to thank Peter Bosz. We still consider him a great coach and person.”
Dutchman Bosz took over the Bundesliga club in the summer but, despite a strong start, their form has deserted them and he has come under increased pressure.
Saturday’s 2-1 loss to Werder left Dortmund seventh in the Bundesliga, while they exited the Champions League after finishing third in Group H behind Tottenham and Real Madrid, failing to win a match in the group stages.
The club announced that former Cologne boss Peter Stoger would take charge of the team until the end of the season.
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