A humiliating 3-0 loss to bitter rivals Cardiff compounded their struggles, leaving them 17th and just seven points above the drop zone.
Alan Sheehan has been appointed caretaker boss, while Williams’ assistants Ryan Harley and George Lawtey have also departed.
Swansea chairman Andy Coleman told the club website: “This was a difficult decision and one that has not been taken lightly.
“Luke has led the club through some challenging periods and we appreciate his hard work. I am aware of the effort he and his staff have put in throughout the last 13 months for Swansea City.
“I want to personally thank Luke, Ryan and George for their dedication and the sacrifices they have made on behalf of the club.
“Unfortunately, since the turn of the year our performances and results have not been of the standard required at this level. Ultimately, that has led us to conclude a change is required in order to bring about an improvement in our showings on the pitch.
“We will keep supporters informed of developments when we are in a position to announce a new head coach, while Alan, his staff and our squad focus on our upcoming fixtures.”