Shakespeare, 53, was promoted from his role as assistant coach on an interim basis following the shock dismissal of Claudio Ranieri in February and in June he was handed a three-year contract.
But the 2015-16 champions have struggled this season and are third from bottom of the table with a single league win.
Monday night’s 1-1 home draw with West Brom saw Leicester’s winless Premier League run reach six matches — the same as when Ranieri was sacked.
Shakespeare’s appointment earlier this year sparked a striking upturn in form that saw Leicester secure their Premier League status and reach the quarter-finals of the Champions League.
Reacting to Tuesday’s development, former Leicester and England player Gary Lineker tweeted: “Was always a miracle, but it’s even more remarkable really that Leicester won the league given the ineptitude of those that run the club.”
Shakespeare had no previous managerial experience when he stepped into the hotseat following Ranieri’s dismissal, which came with Leicester a point above the relegation zone.
But he inspired the team to five straight league wins and they finished the season in a respectable 12th place.
Shakespeare was given around £60 million ($79 million, 67 million euros) to spend on players in the summer transfer window and splashed out on striker Kelechi Iheanacho, Harry Maguire and Vicente Iborra, but Leicester’s only Premier League win came against newly promoted Brighton in August.
Their only other points have been picked up in draws against Huddersfield, Bournemouth and West Brom while Shakespeare oversaw wins against Sheffield United and Liverpool in the League Cup.
He is the second managerial casualty of the Premier League season following the dismissal of Frank de Boer from the Crystal Palace job.
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