The 45-year-old's future was decided by United chief executive Omar Berrada, director of football Jason Wilcox and co-owner Sir Jim Ratcliffe in Monaco, according to reports.
The club announced the decision shortly before midday CET on Thursday, along with the following statement: "After a disappointing start to the season, the club has come to the extremely difficult conclusion that a change is necessary in order to achieve our ambitions.
"Michael is, and always will be, a Manchester United legend. Just as he did as a player, he has conducted himself with the highest standards of dedication and professionalism throughout his time back with the club. His leadership and achievements last season will always be fondly remembered."
"The club intends to appoint a permanent successor as quickly as possible," the statement concluded.
The decision comes after Sunday's dramatic 4-4 draw with Aston Villa at Old Trafford, which extended their winless league run to eight games.
Carrick is the second boss to be fired in as many seasons by United, who are enduring their worst start domestically in 40 years.
Reports claim United States men's national team head coach Mauricio Pochettino is set to replace him in the dugout.
Carrick took over as head coach of his former club in January following the departure of Ruben Amorim, in a deal that initially lasted until the end of the season.
Having steered United back into the Champions League with a third-place finish, he was rewarded with a two-year deal in May.
But things have unravelled since then, and Carrick's position wavered, with United winning just once in the league and three times in all competitions.
Across competitions, Carrick oversaw 32 matches as head coach, winning 15 (47%). His Premier League win percentage was slightly better at 48%, and his 1.74 points-per-game ratio as United boss is the best since Ole Gunnar Solskjaer (1.81).
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A 3-0 defeat at home to Bournemouth last month looked to be the final straw, but United opted to stick with him before winning one of the next three games - against Roma in the Champions League.
Carrick represented United 464 times as a player, winning five Premier League titles, one Champions League and the FA Cup in a decorated career.
After retiring, he joined the first-team coaching staff where he served under Jose Mourinho and Ole Gunnar Solskjaer before undergoing his first stint as caretaker boss when the latter was sacked.
Carrick then joined Middlesbrough for two and a half years before returning to Old Trafford in January this year.
