Stam, whose Royals team were just one game away from promotion to the Premier League in May 2017 are now desperately fighting to stay out of the drop zone to League One and the club believe they have given the Dutchman 'every opportunity' to turn things around.
Reading have won just two of their last 22 league games going back to early November and have taken only eight points from a possible 39 on offer since the turn of the calendar year.
After what is described as 'careful consideration', majority shareholders Yongge Dai and Xiu Li Dai felt they had little option but to make the change.
A club statement issued on Wednesday morning read, "We would like to thank Jaap for his hard work and commitment to the club, in particular noting what he achieved in a memorable first season in club management, and we wish him the very best of luck in his future endeavours.
"We will now focus on identifying and recruiting the right person to take Reading Football Club forward. The club will make no additional comment at this time but will provide further updates as soon as possible."
Former Manchester United, Lazio and AC Milan defender Stam was hired by Reading in the summer of 2016 and was rewarded with a contract extension last year. It was first senior managerial appointment after previously working as an assistant at Ajax and FC Zwolle.
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Source: 90min
