A club statement read: "The decision has been taken in the light of the position the club finds itself in the Premier League at the halfway point of the season.
"Assistant manager Chris Evans and first-team coach Steve Wigley will take charge of first-team matters for the interim period."
Megson's departure is unlikely to be lamented by the Bolton support. Even though he helped save the club from relegation when he took over after an ill-fated stint by Sammy Lee in 2007, the Trotters faithful have never warmed to a man dubbed "the Ginger Mourinho".
Countless times he was forced to deflect attention on himself away from the team, insisting the fan reaction was not having an impact.
But chairman Phil Gartside knew that situation was unsustainable over the long-term and, after tossing away a two-goal lead at the Reebok Stadium last night, has decided to act.
With an FA Cup tie at home to lowly Lincoln looming on Saturday, followed by a Premier League trip to Arsenal next Wednesday, it is not as if Bolton have any breathing space to take stock.
Evans and Wigley will take temporary charge, although whether Gartside appoints either man on a full-time basis is open to doubt given the disaster that unfolded when he appointed Lee from Allardyce's backroom team.
Barclays Premier League Relegation 2009/2010 Win Outright: Bolton 3/1