The 66-year-old Warnock's second spell in charge of Palace ended with the London club in the relegation zone after just one win in 12 Premier League matches.
Palace said that Warnock's assistant, Keith Millen, will be in charge for Sunday's game against Queens Park Rangers as caretaker manager.
One of the most outspoken, colorful characters in English football, Warnock was hired on a two-year deal in August after Tony Pulis quit Palace just two days before the opening match.
"The club would like to put on record its thanks to Neil for all his hard work and energy over the past four months," Palace said on its website a day after a 3-1 loss to Southampton.
Warnock was previously in charge at Palace between 2007 and 2010. His firing comes after the Premier League had reached the packed Christmas fixture program without a manager being dismissed for the first time since the 1995-96 season.