Club president Miguel Archanco announced the decision at a press conference on Tuesday - with the news confirmed on the club's official website - after Osasuna found themselves rooted to the foot of the Primera Division table and still without a point.
The Pamplona-based side lost 2-1 to Granada in their opening match, then suffered a 2-0 derby loss to Athletic Bilbao and the final straw seemed to have come on Sunday when they were beaten 3-0 at home by promoted Villarreal.
Osasuna have also parted company with trainer Toni Ruiz with Mendilibar's former assistant Alfredo Sanchez taking over training on Wednesday while the club search for a replacement.
Archanco said it was a unanimous decision by the board, telling reporters: "We've analysed the play and the results of the first three games this season together with the final nine games of last season and we've arrived at this decision."
Mendilibar, 52, took charge of Osasuna in February 2011 following the sacking of Jose Antonio Camacho and led the club to a ninth-placed finish in his first season in charge.
The following campaign Osasuna finished seventh and just a point outside the European places, but last term they ended the season in 16th, three points above the relegation zone.
Archanco said: "The relationship, both personal and professional with Mr Mendilibar and Mr Ruiz has been exemplary. I'm sincerely very sorry. I know that these are things that happen in football, the results always dictate things, but it's not been easy for me.
"It affects me because I've a very good relationship with Jose Luis and I think that I'm always going to have that."
Regarding what they will be looking for in their new manager, the Osasuna president says they want "a young coach who will be committed to playing young players."
He added: "I think that with the current squad and with the new coach we can turn this situation around. We have a competitive squad in the Primera Division."
Osasuna travel to Getafe when the Primera Division resumes after the international break.