The Eagles have won just two league games all season and have the worst defensive record in the division after conceding 24 goals in 10 games.
That run includes an embarrassing 5-0 defeat at the hands of fierce rivals Brighton, as well as four against Manchester City and three when facing newly promoted Ipswich.
Sage's final game in charge was a 3-1 defeat to Liverpool at Selhurst Park before the international break.
"The club would like to place on record its thanks to Pierre and his staff for their efforts during their time in South London, and wish them well for the future," Palace said in a statement.
"An update on the process of appointing a new Manager will be provided in due course."
Palace's European form has also been inconsistent, with one win, one draw and one defeat leaving them 15th in the Europa League table.
Sage only joined the London club in June 2026 after a very successful campaign with Lens in Ligue 1, where he finished second and won the Coupe de France.
In a game that was reported to be key to deciding his future, the Eagles were comfortably beaten 2-0 by Spurs after a 13th-minute red card for Jean-Philippe Mateta.