Coleman took over at the Black Cats in November but won just five of his 29 matches at the helm as the club suffered successive relegations to leave themselves facing the prospect of playing League One football next season.
Friday night's 2-1 defeat at the hands of Fulham ensured that Sunderland will become the first team in 33 years to finish bottom of the top two tiers in consecutive seasons, sitting six points adrift of 23rd place in the Championship with only one game remaining.
Coleman had previously expressed his desire to stay at the club despite their relegation, but the Black Cats have now announced that the former Wales boss has been "released from his contract".
"Sunderland AFC announces that manager Chris Coleman and his assistant Kit Symons have been released from their contracts," read a statement on the club's official website.
"The club would like to place on record its sincere thanks to Chris and Kit for their tireless efforts in what has been a hugely disappointing season for everyone involved with the club."
Sunderland have only ever spent one season in the third tier of England football before, with that coming in 1987-88.