The 45-year-old was suspended by the club last month and had subsequently refused to attend a disciplinary meeting due to "legal reasons".
It was announced that he will depart the Amex Stadium, along with assistant Mauricio Taricco, but has been given the right to appeal the decision.
"Gus Poyet has been informed by the club's internal disciplinary panel his employment has been terminated ," read a statement on the club's official website.
"In line with the club's own procedures Mr Poyet now has a right of appeal."
Poyet, speaking on his role as a pundit for the Confederations Cup on BBC Sport, said that he plans to appeal against the decision.