Martin departs after Sunday night's 5-0 home defeat at St Mary's by Tottenham.
A club statement read: "We can confirm that we have taken the difficult decision to part ways with our Men’s First Team Manager, Russell Martin.
"Going into the start of the season, we all knew the challenges that we would face this year as we readjusted to life in the top flight, competing in the best and most competitive league in the world.
"However, the reality of our situation is clear. The board have supported Russell and his staff and been open and transparent regarding our expectations. We have all been on the same page in recognising the urgency of needing results to improve.
"We would like to take this opportunity to thank Russell and his staff for all the hard work and dedication they have given the club on and off the pitch over the last 18 months. Everyone connected with Southampton FC will always have fantastic memories of last season, especially the Play-Off Final win in May.
"Current Under-21s Manager Simon Rusk will take charge of the team on an interim basis until we announce a permanent replacement.
"Behind the scenes, we are encouraged by the continued development of talent coming through our Academy. We are proud of the contributions our young players are making and are confident this will remain a source of strength and pride for everyone associated with the club.
"We are also deeply grateful for the continued support and positivity shown by our fans. We are witnessing first-hand the significant gap between the Championship and the Premier League, but your understanding and passion, even when results have not been what we all want, continue to drive our long-term commitment to the club."