The Scot was an unpopular appointment among many Villa fans after he took neighbours Birmingham down last season and although he avoided a second successive relegation this term, it was not enough to save his job.
A winless run stretching to nine matches saw Villa finish just two points clear of the drop and McLeish's fate was confirmed today following talks with senior club officials.
Villa chairman Randy Lerner said: "We need to be clear and candid with ourselves and with supporters about what we have lacked in recent years.
"Compelling play and results that instil a sense of confidence that Villa is on the right track have been plainly absent.
"The most immediate action that we can take is to look carefully at our options in terms of bringing in a new manager who sees the club's potential and embraces our collective expectations."
Chief executive Paul Faulkner said: "We'd like to thank Alex for his hard work and efforts throughout this tough season.
"We are mindful of the club's need to prepare thoroughly for the new campaign, and for the new manager to be able to begin working with the board so that he is quickly immersed in these preparations and also in the long-term objectives of the club.
"Our focus now will be driven by these imperatives."
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Villa confirmed McLeish's departure in a statement.
It read: "Aston Villa can confirm that Alex McLeish's contract has been terminated with immediate effect.
"The club has been disappointed with this season's results, performances and the general message these have sent to our fans.
"The board wishes to assure supporters that we are conscious in every sense that Villa expects and deserves more and we will strive to deliver this."