The Spanish outfit have named former Real Madrid assistant coach Albert Celades as his successor.
The 54-year-old joined the club in 2017 with Valencia then struggling after back-to-back 12th-placed finishes in La Liga.
But in both of his two full seasons at the helm he led Los Ches to fourth spot and Champions League qualification, capping his stint with the Copa del Rey title last term -- Valencia's first major trophy in 11 years.
"Valencia CF on Wednesday told Marcelino Garcia Toral he was dismissed as coach of the first team," the Mestalla outfit said in a statement.
"The club wants to thank you for your work and dedication during your time with the club and wish you the greatest success for the future."
Marcelino had also previously coached Sevilla and Villarreal, and is the first boss to be sacked in the Spanish top flight this season.
Valencia started their La Liga campaign slowly with a home draw against Real Sociedad and a defeat at Celta Vigo, but bounced back by winning 2-0 against Real Mallorca before the international break.
The 43-year-old Celades, a former Barcelona and Real Madrid midfielder, has signed a deal until the end of June 2021 and Valencia said he will take his first training session later on Wednesday.
Celades' new team visit Stamford Bridge on Tuesday for their opening game in Champions League Group H, which also features last season's semi-finalists Ajax and Lille, after facing reigning La Liga champions Barcelona in a repeat of last season's Copa del Rey final on Saturday.