A year after making the Super Bowl, the Raiders tied for the worst record in the NFL at 4-12, their worst record since 1997, after losing 10 of their last 12 games. It means Oakland owns the second pick in the April draft.
Callahan was criticized by a number of players, the most outspoken being four-time Pro Bowl cornerback Charles Woodson.
"This is where I plan on being," Woodson told the Oakland Tribune before the firing was announced. "I don't plan on Callahan being here."
Woodson is eligible to become a free agent in March.
Callahan actually was fired early Tuesday, but requested that the club hold any announcement until Wednesday for personal and family reasons. Managing partner Al Davis chose not to pick up a series of one-year club options on Callahan's contract.
In two seasons, he was 15-17 with Oakland.