The 53-year-old only took the helm at the La Liga club in the summer, but a poor start to the Spanish season, which has left Levante in 19th spot, has led to his departure.
"The board of directors have held a special meeting late on Monday night at Estadio Ciutat de Valencia, with sporting director Manolo Salvador and has decided to rescind the contract of Jose Luis Mendilibar as manager of the azulgrana club," read a statement from the club.
"The board of directors appreciates the professionalism that Jose Luis Mendilibar has shown during his stay with the club, along with his assistant manager, Inaki Bea and fitness coach, Toni Ruiz. We wish them all the best of fortune for their futures, at a professional and personal level."
Mendilibar also left his position with Osasuna early last season.