The Spaniard leaves with the club in 19th in the Premier League. Assistant head coach Steve Agnew takes over with immediate effect.
An official statement read: "Middlesbrough Football Club can today confirm the departure of Head Coach Aitor Karanka. Following discussions, both parties have agreed that it is in the best interests of the club to make this change.
"The club would like to thank Aitor for all his hard work over the past three-and-a-half years and for the success we've had during that time. We wish him all the best for the future.
"Aitor Karanka said: 'I'd like to thank Middlesbrough for a wonderful opportunity and the players, staff and all the people at the club who I have worked with. I'd also like to thank the fans for their support. This club will always hold a special place for me and I wish everyone connected with Middlesbrough Football Club the very best for the future."
"Steve Agnew will step up from his role as assistant Head Coach to take control of first team affairs with immediate effect."
Boro are without a win in 2017 and haven't tasted victory since December.
Their woeful run has seen them fall into the drop zone with the club finally deciding to act confirming the move early on Thursday morning.
Agnew takes charge and will be in the dugout for the clash with Manchester United this weekend and Nigel Pearson is the early favourite to take over. Former Leicester boss Pearson was wanted by some of the Foxes' title-winning squad to replace Claudio Ranieri after his sacking in February, but Boro could take the plunge after contacting him last year when Karanka's future was in serious doubt.
While sackings are often described as mutual departures, The Independent understands that in this case it is wholly applicable. Tensions had risen once again between Karanka and the club since December, when league results went irretrievably south. Frustrated with his time at the club, Karanka sought another frank discussion with chairman Steve Gibson and the pair decided that it would be best for Boro if the Spaniard were to leave, doing so having restored them to the Premier League but also with the lowest top-flight win percentage of any coach in their history.