The board voted to dismiss Bartz, who still had more than a year to go on a four-year contract, the Los Angeles Times reported. Tim Morse, the chief financial officer, is to serve as an interim chief executive officer.
Bartz told employees in a memo that Roy Bostock, the chairman, gave her the news in a telephone call.
Yahoo! has been losing market share to Google and Facebook, a slide that continued after Bartz became CEO in January 2009. The company, headquartered in Sunnyvale, Calif., is expected to lose more ground with its second-quarter earnings announcement.
"She was very highly compensated for a CEO who had declining revenue growth every single quarter," Colin Gillis, a technology analyst at BGC Partners, told the Times.
Bartz, 62, served as CEO of Autodesk for 14 years before joining Yahoo!.