Bolton chairman Phil Gartside said in a statement on the club's official website: "Owen poured his heart and soul into the job, both on and off the pitch, and he led our club with great dignity during some very challenging times."
Gartside added: "It is the right time for a change. We set a target at the beginning of the season and want to get back on track.
"I would like to place on record our sincere thanks to Owen, Sandy Stewart and Steve Davis for all their hard work during their time at Bolton Wanderers."
Coyle left Burnley in January 2010 to take up the hotseat at the Reebok Stadium on a two-and-a-half-year deal after Gary Megson was relieved of his duties.
He led the club to safety from 18th position, but failed to keep his side in the top flight last campaign.