The Seasiders have taken just one point since November during a run of nine defeats in 10 games and rumours had been rife that Ince would be relieved of his duties in the past week.
The latest reverse, a 2-0 defeat at bottom club Barnsley, left Blackpool 14th in the table.
A club statement said: "Blackpool Football Club can confirm that manager Paul Ince and assistants Alex Rae and Steve Thompson have had their contracts terminated with immediate effect.
"Barry Ferguson will take charge of training when the players return on Thursday.
"A further announcement will be made in due course."
Blackpool were knocked out of the FA Cup by Bolton at the start of the year, with the last victory coming in the 2-0 league win over Sheffield Wednesday on November 30 at Bloomfield Road.
Ince failed to see out 12 months in charge, after taking over from caretaker Thompson on February 18, 2013.
Ferguson will be in charge for Blackpool's next fixture, the Championship visit of Doncaster Rovers on Saturday.
The Scot, 35, moved to Bloomfield Road for an undisclosed fee from Birmingham City in the summer of 2011 and, despite having a short loan spell at neighbours Fleetwood, signed a new one-year contract with a year's option in June 2013.
He has made 84 appearances for Blackpool to date, scoring once.
Although Blackpool are still eight points off the drop zone, results only tell part of the story with fans furious at Ince's failure to add to a depleted squad this month and the indiscipline which has seen them accrue nine red cards already.
Ince, who has also managed Blackburn, Macclesfield, MK Dons and Notts County, guided the team to a mid-table finish last season before starting this campaign in impressive fashion.
The 46-year-old was voted manager of the month in August, when his team topped the division, and they were still in the top four as recently as November before the wheels began to fall off at an alarming speed both on and off the field.
In their first December fixture, three men were sent off in the loss at Yeovil and two more were given their marching orders in a 5-1 thrashing by Derby four days later.
The Seasiders, though, denied they had a discipline problem, an accusation which had been levelled at them since Ince received a five-game stadium ban from the FA in October for his actions following a game with Bournemouth in September.
The governing body later disclosed the details of Ince's expletive-laden rant at a fourth official, who the Blackpool boss had also physically assaulted following the final whistle.
Things only got worse in the new year with the club seeing five loanees returning to their parent clubs and then fining striker Michael Chopra for his outburst on Twitter in which he complained only six players and a fitness coach were present at training.