The 61-year-old replaced Enrique Martin as the club's head coach in November but has won just one match while at the helm.
The ex-Granada boss oversaw five league games and three Copa del Rey clashes, losing seven matches and earning his sole victory against his former side before Christmas.
"After a meeting held this morning, the board of directors of Club Atletico Osasuna has decided to cease Joaquin Caparros as coach of the first team," confirmed a statement on the club's website.
"The sports director, Petar Vasiljevic, will take over the team until the end of this season."
Caparros leaves with the club bottom of La Liga and five points from safety.