Barnsley have sacked Andy Ritchie just weeks after blocking Sheffield Wednesday's bid to approach the Tykes manager.
Ritchie, 46, led Barnsley to promotion to the Championship in May via the League One play-offs in his first full season in charge.
But the Oakwell board have terminated the former Manchester United and Leeds striker's contract following a row over team strengthening.
Ritchie, who has been unable to add to his squad in recent weeks, has come under pressure after a run of just two wins in their last nine league matches has left them second bottom in the table.
But only last month Sheffield Wednesday chairman Dave Allen confirmed Ritchie had been one of the managers he wanted to speak to about the vacancy at Hillsborough following Paul Sturrock's dismissal.
But Barnsley chairman Gordon Shepherd blocked the Owls' approach and announced he would be opening talks with Ritchie about a new contract, with his current deal due to expire this summer.
Academy manager Simon Davey has been placed in temporary charge of first-team affairs.
A Barnsley club statement read: 'It is with regret that the board of Barnsley Football Club has announced its decision to terminate the contract of manager Andy Ritchie with immediate effect.
'The decision by the board follows the failure to resolve differences with the manager concerning the need the strengthen the first-team squad to ensure survival in the Championship.
'In the close season, following the club's promotion, the board were of the opinion that the first-team squad required strengthening in terms of additional, proven-quality players, and proper cover for key positions.
'The board had earmarked funding specifically for squad strengthening and set as a key objective for the manager the delivery of this objective.
'It will be clear to fans that the desired strengthening of the squad has not been achieved and that the football club is operating largely with the same first-team squad as last season except that Sam Togwell and Michael McIndoe have replaced Stephen McPhail and Chris Shuker.'
The statement continued: 'Fans will also be aware that the manager has followed an approach that gives preference to the players who gained promotion last season to keep their places in the current campaign.
'The board has had repeated meetings with the manager to encourage team strengthening alongside the need to show appropriate loyalty.
'It has been the board's opinion throughout that ensuring competition for places and having different tactical options through the squad composition was essential to survival in the Championship.
'Recently, the club entered into contract negotiations with the manager and as part of these discussions was seeking a commitment to squad strengthening.
'Rather than creating a basis for a compromise in views, these discussions served to emphasise the difference in opinions on how the club can best maintain its Championship status.
'As a consequence, the board felt that it had no alternative to the decision it has taken. It is extremely disappointing to have arrived at this point.
'The board are grateful to Andy Ritchie for his part in winning promotion for the club to the Championship. The key challenge now is to maintain that status.'