The 53-year-old former Scotland manager said his farewells to the club's staff on Monday morning after Villa ended a poor Premier League campaign, finishing just above the relegation zone after winning only four of 19 games at home.
McLeish was an unpopular appointment as he arrived from Birmingham City last year but poor results and performances worsened his relationship with fans.
McLeish took over from Gerard Houllier in June 2011 but Villa won only seven league matches all season, effectively securing their Premier League status with a 1-1 draw against Tottenham in the penultimate game.
A club statement read: "Aston Villa can confirm that Alex McLeish's contract has been terminated with immediate effect. The club has been disappointed with this season's results, performances and the general message these have sent to our fans.
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