The Saints were the first club to be demoted to the Championship this season after Sunday's 3-1 defeat to Tottenham.
Juric, who replaced the sacked Russell Martin in December, will be succeeded by Simon Rusk on an interim basis for the rest of term.
A statement on Monday read: "Ivan came to Southampton at a tough time and was tasked with trying to improve a squad in a difficult situation.
"Unfortunately, we haven't seen performances progress the way we had hoped, but we would like to thank Ivan and his staff for their honesty and hard work as they fought against the odds to try and keep us up.
"With relegation to the Championship now confirmed, we believe it is important to give fans, players and staff some clarity on the future as we head into a very important summer.
"The process of finding a new manager to lead us as we look to secure an immediate return to the Premier League has now begun and is being led by Group Technical Director Johannes Spors."
Juric was appointed after his exit from Roma and was handed an 18-month contract with a break clause before taking charge of his first match on Boxing Day.
The Croatian oversaw 14 Premier League games but picked up just one win, which came against fellow strugglers Ipswich in February.
Twelve of those matches were defeats, with Southampton conceding an average of 2.7 goals per game during Juric's tenure.
That record contributed to Southampton experiencing the earliest-ever Premier League relegation, dropping to the Championship with seven games remaining.
"We remain incredibly grateful for the ongoing support of our fans. Their continued dedication and passion, despite what has been a very tough season, is remarkable and is appreciated by everyone at the club," Southampton's statement continued.
"Despite the challenges that relegation will bring, our goal is to restore a sense of pride for them in their team and club once again."
Southampton are next in action when they host Aston Villa at St Mary's on Saturday.