Chicago announced the coach's dismissal on Monday. Hoiberg, 48, owns a 115-155 record in four seasons as the Bulls' coach. His Bulls were 5-19 this season.
Associate head coach Jim Boylen has been promoted to head coach.
The Bulls reached the playoffs once during Hoiberg's tenure, losing in the first round of the 2017 postseason.
"Decisions like this one are never easy to make, however I felt this was the right choice for our organization at this time," Bulls executive vice president of basketball operations John Paxson said in a news release.
"After a thorough evaluation, I elected to make this move with the overall development of our team in mind. As a team, I believe it is imperative that we make unfaltering strides in the right direction and build the right habits to help put our players in the best position to evolve not only now, but into the future. I want to thank Fred for his dedication and efforts, as well as for his enduring commitment to our team."
Hoiberg became the Bulls' head coach on June 2, 2015. He spent five seasons as head coach at Iowa State before accepting the job.
The Bulls are on a six-game losing streak. Chicago faces the Indiana Pacers at 7 p.m. on Tuesday at Bankers Life Fieldhouse in Indianapolis.