Tuesday night's 2-1 home defeat to Derby sent Town to the foot of the Championship table, 10 matches on from their solitary league win this term against Watford.
Former Bradford, Wigan and Derby boss Jewell, who took charge at Portman Road in January 2011, suggested he was close to quitting following the weekend loss to Hull and did not appear at the post-match press conference following the County defeat.
"Since he first walked through the door here, no one has worked harder to bring success to this football club than Paul Jewell," club owner Marcus Evans said on Ipswich's official website.
"Unfortunately his outstanding commitment has not been rewarded by results on the pitch and having spoken with Paul at length, we feel it's best for him and the club if we go our separate ways."
Jewell won 30 of his 86 games in charge of the club and his assistant Chris Hutchings has been placed in temporary charge ahead of Saturday's game at home to Sheffield Wednesday.
“I could not have had any more support than I have done from Marcus Evans and Simon Clegg," Jewell said. "I have enjoyed working with both of them in my time as Ipswich Town manager.
“We all know that football is a results business though and I’ve never hidden from the fact that our results have not been good enough.
“It’s been a privilege to be manager of such a fantastic football club and I want to thank the staff and the supporters for the backing they have given me in my time at the club and wish Ipswich Town the best of fortunes ahead.”