The former Chelsea and Valencia handler – who has guided the side that won the treble including the Champions League in 2010 to just one win in their last 10 league games – has been replaced by youth team coach Andrea Stramaccioni.
The final straw for Inter president Massimo Moratti and the board came with the 2-0 defeat at Juventus on Sunday leaving them eighth in Serie A, 10 points off the Champions League positions, and having failed to score in seven of their last 10 league matches.
The end for Ranieri came only hours after Moratti had said he thought the coach would last until the end of the season.
It’s a huge risk from the president as Stramaccioni, 36, has no first team experience whereas Ranieri has also coached the likes of Juventus, Roma and Atletico Madrid during a long career.
Italian press seemed to have a sniff of what was coming and asked Stramaccioni earlier in the day what he would feel about taking over the reins.
“If Moratti calls, I always respond, in general,” he had said.
“He’s my president, I always respond to his calls, but no-one has called.”
That call duly came despite Ranieri’s assurance on Sunday he would keep battling following the Juve defeat.
However, over the last couple of months Inter’s interest in the Italian Cup and Champions League ended while their league form gradually deteriorated.
Their hopes of regaining the Champions League trophy they won under Jose Mourinho in 2010 disappeared earlier this month when they went out on the away goals rule to out of form French side Marseille in the Last 16.
Although a Champions League finish is highly unlikely, they are only three points off a Europa League berth.
But earlier this season, Ranieri had guided Inter to seven straight league wins and nine wins from 10.
It means that Ranieri has become the 16th coaching change in Serie A this season and the second at Inter, who began the campaign with Gian Piero Gasperini.
Ranieri, 60, enjoyed early success in his career, winning the third division title with Cagliari in 1990 and then the second division crown with Fiorentina four years later.
He won the Italian Cup with Fiorentina in 1996 and the Spanish Cup with Valencia in 1999.
But despite coaching some of the biggest teams in European football, he failed to deliver silverware at Chelsea, Juve, Roma and now Inter.
The move to fire Ranieri means Inter have joined Cesena, Novara and Palermo in changing coaches twice this season.
Cagliari are still out in front with three coaching changes while half of the 20-team league have fired at least one coach.