There has been mounting speculation since the end of the season that the Frenchman would leave St Mary’s, despite leading them to a top-half finish and taking them to the League Cup final.
A poor end to the league campaign though put added pressure on Puel’s positon, with just one win in their last eight matches and Southampton failing to score in any of their last five home games.
Having taken a few weeks to consider their options, the Saints board have decided to sack the former Nice boss and begin the search for another manager.
In a club statement, Southampton said: “Everyone at Southampton would like to express our thanks to Claude for his hard work and commitment this year. The highlight of the season was a memorable day at Wembley in the EFL Cup final, a day our fans will always treasure.
“We wish Claude well for the future. The search for a new management team is under way. We are confident that we will find the right fit in line with the long-term vision of the club.”
Southampton are now looking for a fourth manager in three years, having seen Maurico Pochettino and Ronald Koeman leave to join Tottenham and Everton respectively since 2014.
Caretaker manager Darren Moore is convinced West Brom will give everything in Saturday's home clash against Liverpool.
Benfica are already looking at replacement right-backs as they expect to lose Leicester City target Andre Almeida this summer.
Celtic boss Brendan Rodgers is determined to keep Leigh Griffiths at Parkhead on a new long-term deal.