The 54-year-old - formerly of West Bromwich Albion and Real Betis - took over at the La Liga side in February and managed to save them from relegation but has now been relieved of duty nine games into the new campaign.
Depor have won just twice in the league during that time and a 2-1 home loss to newcomers Girona on Monday night proved to be the last straw.
In a statement on their website, the club said: "The Board of Directors of Real Club Deportivo has decided to rescind the contract of Pepe Mel as coach of the team.
"The club wants to sincerely thank the Madrid coach and his entire coaching staff for the dedication, effort and professionalism they have shown during the time they have directed the first sports team."
Youth coach Cristobal Parralo has been appointed interim manager until the end of the season.