The club said the decision was "by mutual consent" although after Villas-Boas said he would fight on following Sunday's loss, the move will be widely seen as a sacking.
A statement from the club on Monday morning read: "The club can announce that agreement has been reached with head coach, Andre Villas-Boas, for the termination of his services.
"The decision was by mutual consent and in the interests of all parties.
"We wish Andre well for the future.
"We shall make a further announcement in due course."
The Portuguese leaves with the White Hart Lane club seventh in the Premier League table, eight points off top spot and five outside the top four.
Villas-Boas, who replaced Harry Redknapp as Spurs manager in the summer of 2012, spent more than £100million in the summer transfer window, much of which was recouped by the sale of Gareth Bale to Real Madrid.
Despite plenty of talent being added to the squad, Spurs suffered a heavy 6-0 defeat at Manchester City last month and on Sunday were beaten 5-0 at home by Liverpool, a side considered serious rivals to them in terms of a top-four spot.
The search will now begin for another new manager for the North London club.
Former England boss Fabio Capello was immediately installed as Sky Bet's 4/1 favourite for the post after he was pictured at yesterday's game.
The bookmaker's other early contenders include Swansea chief Michael Laudrup, Guus Hiddink, Tim Sherwood and ex-boss Glenn Hoddle.