Tony Pulis was sacked by Sheffield on Wednesday after being in charge for just 45 days.
Pulis joined the Owls in November and has won just one win in 10 league games.
Championship wrestlers made the announcement late Monday night, two days after a 1-1 draw at Blackburn.
President Dejphon Chansiri told the club’s website: “Performance and results have not been at the level expected since Tony Pulis was appointed.
“There are also other issues that influenced this decision. On the pitch, seven points out of a possible 30 are not acceptable.
“It is vital that we maintain our Championship status and I think I need to make a change now with more than half of the season remaining to give us the best possible chance to do so.”
First-team coach Neil Thompson will take charge of the squad for Tuesday’s game against Middlesbrough and until a permanent appointment is made.
Former Stoke, West Brom and Middlesbrough manager Pulis was appointed on November 13 following the departure of Garry Monk but only won one game, a 1-0 home win over Coventry on the 19th December.
Wednesday are at the second bottom of the table on 13 points, three points of safety.