The Foxes have made a disappointing start to the season, winning just one of their first nine games in the npower Championship, and slipped to the bottom of the table following their midweek defeat at Norwich.
A club statement read: "The decision has been taken as a result of the club's poor run of results this season. The club would like to state that Paulo Sousa is a first-class individual, but that this decision has been taken in the best interests of the club and our ambitions to move up the npower Championship."
The statement continued: "The search for a new manager begins immediately and the club anticipates a quick appointment."
Current goalkeeping coach Mike Stowell and coach Chris Powell will take temporary charge of the first-team for Saturday's home match against Scunthorpe.
Sousa was appointed at the Walkers Stadium in July following the departure of Pearson at the end of last season when the Foxes reached the play-offs.
The former Portugal international led previous club Swansea to an eighth-place finish in the Championship in the 2009/10 campaign.
Source: PA
Source: PA