A statement on the club's website says a new first team manager will be appointed in due course.
Mackay had been in charge at Cardiff for two-and-a-half years after taking over from Dave Jones in June 2011.
He guided the club back to the top flight of English football after a 52-year absence when they won the Championship title in 2013.
His dismissal came less than 24-hours after the club's 3-0 home Boxing Day defeat to Southampton in the Premier League.
It followed a public row with the club's billionaire owner Vincent Tan, who sent an email to Mackay on 16 December asking him to resign or be sacked.
Tan also accused Mackay of overspending in the transfer market and announced the manager would have no money to spend in the January transfer window.
The 41-year-old Scotsman refused to resign, and subsequently led the team in the matches against Liverpool and Southampton before his dismissal.
The decision is bound to infuriate Cardiff fans who showed vocal support for Mackay at yesterday's game and at Liverpool at the weekend.