Caixinha, 46, has lost seven of his 26 games in charge of the Ibrox club.
An emergency meeting was called by Rangers directors this afternoon and a statement on their website confirmed the departure.
“Rangers Football Club announce today that Pedro Caixinha has left the Club,” the statement read.
“The decision to part company with Pedro was taken after careful consideration and the search for a new manager will begin immediately.
“Pedro was appointed in March this year but results have been disappointing and not commensurate with the level of investment that was made available.
“Graeme Murty, head development squad coach, will take charge of the first-team in the interim, just as he did earlier this year.
“The priority is to appoint a new manager as quickly as possible, but the Board will take as much time as is necessary to secure the right person capable of representing Rangers and providing the brand of football supporters rightly expect.
“We, the Board, appreciate this is a difficult time for all Rangers supporters and we thank you for your patience and know Graeme and the players will receive your full backing in the days ahead.
“We thank Pedro and his backroom staff for their efforts and commitment and wish them well for the future.”
It is understood Billy Davies is keen on the vacancy, although there has been no official approach as yet.
Davies has not worked since being sacked by Notting Forest over three-and-a-half years ago.
Rangers are fourth in the Scottish Premiership and trail league-leaders Celtic by eight points.
Pressure had been building on the Portuguese boss, especially after their League Cup semi-final defeat to Motherwell at the weekend.
Rangers threw away a 1-0 lead against Kilmarnock last night in the final minute of the game, while title rivals Celtic won at Aberdeen.
It saw Motherwell move above Gers into third place in the table.
Rangers are now eight points off Celtic in the title race and after the draw last night Caixinha said: “I say to the supporters they’re the most loyal fans in the world. They don’t deserve to pass through this situation.
“We work for them and I’m more disappointed for them because apart from being the Rangers manager, I’m also a fan. I’m blue inside.
“When I come to represent one club I represent it with everything I have to give and with my passion, my knowledge and my work.
“But I’m strong enough to take this thing forward and always look to put things in the right place.
“Football is sometimes very cruel and that’s how it was tonight. It’s not every day you win a penalty, miss a penalty and then lose a goal.
“The boys tried, especially in the first half. We had a lot of situations where we had to change players and formations but overall they all tried. I’m happy with the effort.
“Am I worried about my future? No, I’m just worried about getting down to work in the morning and to do my very best. I’ll keep looking forward as usual. Am I the right man? Yes, I am.”