The 50-year-old, who led the club into La Liga in May 2011, had come under increasing pressure following a poor start to the season for the Seville outfit.
A haul of just 10 points from their 15 matches has left Betis bottom of the table, with the powers-that-be deciding that a change should be made at this stage of the campaign.
"Real Betis, with their sports team in a delicate position and needing to change the dynamic of results, can announce their decision to dispense with the services of Pepe Mel, first-team coach since the summer of 2010," read a club statement.
"The club would like to thank the coach for these years of commitment and dedication, in which he has overseen a project that led Betis out of the Segunda Division and into Europe. The work of his assistants Roberto Rios and David Gomez is also appreciated."
Former Villarreal and Club Brugge coach Juan Carlos Garrido has been handed the position until the end of the season.