The former Manchester United and Everton striker was appointed on October 11th, 83 days ago.
When Rooney took over from former manager John Eustace, Birmingham were sixth in the league table.
After nine losses in 15 matches, the Championship's worst record in that period, they are now slumped in 20th place.
Birmingham CEO Garry Cook said: “We are committed to doing what is necessary to bring success to St. Andrew’s.
“Unfortunately, Wayne’s time with us did not go as planned and we have decided to move in a different direction.
“The search for a successor begins with immediate effect."
The club's professional development coach, Steve Spooner, has been appointed manager on an interim basis.
Birmingham are next in action on Saturday 6th against Hull City in the FA Cup.