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!.
Exploding whale video goes viral on Internet
Jordana Brewster on Paul Walker: 'He was an enormous presence in my life'