The final straw for the club was Manchester United's defeat over the weekend against Everton - Moyes' previous club. This followed several high-profile losses for the club this season.
An off-the-record press briefing on Monday was followed by reports in several U.K. newspapers and broadcasters that Moyes was facing the sack, and bookmaker Ladbrokes suspended betting on who would be the next Premier League manager to leave.
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Manchester United are currently seventh in the Premier League, with just four games left in the season. The team look set to end the season with their lowest points tally in Premier League history, and have missed out on qualification for the lucrative European Champions League.
This compares to last year, when the club won the title under previous manager Alex Ferguson - who became the most successful soccer manager ever during his 26-year reign at the head of the club.
Ferguson led the team to 13 Premier League titles and 2 European Champions League trophies and was knighted by the Queen in 1999. The announcement of his retirement last May sparked a 2 percent drop in Manchester United's shares.
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The club's activity in the transfer market has also been criticized, with only two recruits joining the team this year worth a combined £60 million ($100 million).
Moyes' departure will see Manchester United's U.S. owners, the Glazer family, prematurely end the six-year contract he was awarded last May. Reports state that a clause in his contract means the soccer club will not have to pay Moyes his £5 million-a-year contract in full.
Player-coach Ryan Giggs will assume responsibility for the first team until a permanent appointment can be made, the club confirmed Tuesday.
Speculation has been rife about a long-term replacement, however, with possible successors including Jurgen Klopp, head of Germany's Borussia Dortmund club, Holland coach Louis van Gaal and Spain's Atletico Madrid boss Diego Simeone.
Financial analyst Louise Cooper, founder of CooperCity, said the question would now arise as to whether the role was a "poisoned chalice."
"This is a highly indebted firm which leaves little financial room for disappointment. Frankly the Glazers could not afford to wait for Moyes to step up to the job," she said in a research note on Tuesday.
"It took Ferguson some years as manager to achieve the performance that he later become famous for. But the financial position of Manchester United is different now. The Glazers bought the club to make money, even if it is a trophy asset."