The Blades are currently fifth in table, six points adrift of an automatic promotion place.
But a run of one victory in six games has raised major question marks over their promotion hunt and placed Wilson under immense pressure.
First team coach Chris Morgan will take charge of the Blades until the end of the campaign.
United owner Kevin McCabe confirmed the news on the club's official website.
McCabe said: "We must thank Danny and Frank for all their endeavours and hard work over the past two seasons.
"We now have a mini season for this club to achieve success and we will all back Chris in this mission."