The Championship outfit have revealed that the decision was made during a meeting between the Scotsman and chairman Dave Whelan.
The former Bolton Wanderers boss was at the centre of jeers from the Latics fans following their third home defeat within a week against Derby County on Sunday.
Coyle told the club's official website: "It is with great sadness that we have made this decision and I would like to thank all my football staff and the staff at the club, who have been very supportive of me in my time here.
"I am confident that with this set of players, the team can keep moving in the right direction."
Wigan, who dropped out of the Premier League last season, are currently 14th in the Championship table after 16 games.