A club statement read: “Following a board meeting on Wednesday morning, it was felt that a change of first-team management was needed to give the club the best possible opportunity to preserve our Championship status.
“The board have now started the process of appointing a new first-team manager.”
Fitness coach Paul Warne will take temporary control of the first team while Rotherham look for their fifth manager since the start of the 2015-16 season.
Steve Evans, Neil Redfearn and Neil Warnock had spells in charge at the New York Stadium last term.
Stubbs was in his first managerial role in England, having spent two seasons as boss of Hibs and leading them to a first Scottish Cup success in 114 years in May.