The 46-year-old only joined Wolves at the beginning of last season, but with the club languishing in the relegation zone just eight games into the new season, his time at Molineux has come to an end.
Lage’s side have recorded just one win in 15 Premier League games stretching back to last season.
They have the worst attacking record of any team in the league this term, having scored just three goals.
Daniel Podence’s 45th-minute strike against Southampton last month was enough to secure their first win of the season, but they failed to build on it, recording back-to-back losses against Manchester City and West Ham.
The defeat against the Hammers was enough to seal Lage’s fate, and he has now paid the price for his side’s inconsistency.
Speaking on the club’s decision to axe the former Benfica tactician, Wolves chairman Jeff Shi said: “Bruno is an excellent coach, a hardworking and dedicated manager, and a warm, wise and honest man.
“I honestly have no doubts about Bruno’s ability, and I’m sure he will succeed elsewhere. However, the team’s form and performances over the last few months mean that we have no choice but to act.
“On behalf of everyone at Wolves, I would like to place on record our gratitude to Bruno and his coaching team for all their efforts during their time with the club, and wish them the very best for the future.”
Lage won the Premier League manager of the month in January on the way to guiding his side to a tenth-place finish after replacing Nuno Espirito Santo last season.
But his side have taken just six points from eight league games and are third from bottom with a five-point gap from Leicester City in last place.
Wolves’ next fixture will see them visit Stamford Bridge as they take on Chelsea, and the club have confirmed that Steve Davis and James Collins will prepare the team to face the Blues while they search for Lage’s successor.
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