The home defeat to Wolfsburg was the final straw for Gladbach's director of sport Max Eberl.
The home defeat was the final straw for Gladbach's director of sport Max Eberl, who had said the team needed to win their last three games before Christmas for Schubert's future to be safe.
But after losing to Augsburg and earning a scrappy win over Mainz, goals by Wolfsburg's Daniel Caligiuri and Mario Gomez, with a consolation by Gladbach's Thorgan Hazard, sealed Gladbach's eighth defeat in 16 league games on Tuesday to leave them 14th.
They have won just once in their past 10 games in all competitions.
"We have come to the conclusion that it is better for both parties to end their cooperation now," said Eberl.
Schubert's replacement -- ex-Wolfsburg coach Dieter Hecking has been linked to the role -- now has the four-week winter break to inject confidence in a team that have taken 16 points from their first 16 league games.
It is a sad end to Schubert's 15 months in charge, which saw him take Gladbach from the bottom of the league table, when he replaced Lucien Favre in September 2015, to fourth last season and a Champions League qualification place.
The 45-year-old Schubert only signed a contract extension in September, which would have run until 2019, but things went downhill quickly.
The sale of key Swiss midfielder Granit Xhaka to Arsenal, defender Havard Nordveit to West Ham, plus the loss of centre-backs Martin Stranl (retired) and Roel Brouwers, to Dutch side Roda Kerkrade, meant Schubert lost a wealth of experience.
Battling displays in their Champions League group against Barcelona, Manchester City and Celtic saw Gladbach finish third to qualify for the Europa League's knockout stages.
But Schubert has ultimately paid the price for poor form in the Bundesliga, starting with a 4-0 drubbing by Schalke in early October which saw them pick up just six points in the next ten games.