Brighton finished just outside the relegation zone in their second season in the top flight.
Hughton’s assistant Paul Trollope and first-team coach Paul Nevin have also departed the Amex.
Brighton chairman Tony Bloom said: “Chris has done an excellent job over the past four and a half years.
“First stabilising our club, reaching the play-offs in his first full season, securing our first ever promotion to the Premier League, and retaining our status in two successive seasons.
“Undoubtedly, this has been one of the most difficult decisions I have had to make as chairman of Brighton & Hove Albion, but ultimately one I have made due to how we struggled in the second half of the season.
“Our run of 3 wins from 23 Premier League matches put our status at significant risk.
“It is with that in mind, and the performances during that period, that I now feel it’s the right time for a change.
“Chris will always be very fondly remembered by Albion staff and fans as one of our club’s finest and most-respected managers.”
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