"Lyon and Laurent Blanc have decided, by mutual consent, to end their collaboration as of today," the club wrote in a press release.
"Lyon would like to thank Laurent Blanc and his staff for their commitment and professionalism over the past 11 months at the helm of the professional team."
The announcement ended days of speculation, with a source close to Blanc telling AFP earlier on Tuesday: "It's over."
After finishing third last season, Lyon have started the new campaign with three defeats and a draw, leaving them propping up the table. They also missed out on European competition for the second year running.
Blanc, who won the 1998 World Cup as a player and was in charge of the national team between 2010 and 2012, replaced Dutchman Peter Bosz in October 2022 and still had a year on his contract.
The team for next Sunday's Ligue 1 match against Le Havre will be prepared by one of Blanc's assistants, Jean-Francois Vulliez, while Lyon's new American owner John Textor hunts for a successor.
Former Italian international midfielder Gennaro Gattuso, who has been out of work since leaving Valencia at the start of the year, and Oliver Glasner who left Eintracht Frankfurt at the end of last season, have both been linked with the job.
Former Senegal international Habib Beye, who is currently in charge at Paris-based third-tier club Red Star, is also believed to be in the frame.