Schalke sacked Domenico Tedesco following their 7-0 Champions League loss to Manchester City.
Schalke are also winless in their last 7 Bundesliga matches. Huub Stevens replaces Tedesco as manager.
"This decision was anything but easy because Domenico Tedesco is very highly valued by Schalke. Last season he was able to oversee a very positive sporting development, which reached its high point by finishing runner-up in the championship," said sporting director Jochen Schneider.