Gerrard, who replaced Dean Smith last November, was verbally abused by Villa fans and taunted by the Fulham faithful at Craven Cottage as his side slumped to a chaotic defeat in which Douglas Luiz was sent off and Tyrone Mings scored an own goal.
"We would like to thank Steven for his hard work and commitment and wish him well for the future," Aston Villa said in a statement.
There had been positive signs in the loss to Chelsea at the weekend but Villa were pitiful against Fulham with Gerrard admitting he was shocked by their first-half display.
Harrison Reed gave Fulham the lead in the 36th minute and Aleksandar Mitrovic scored from the penalty spot for his eighth goal of the season before a Mings own goal while trying to clear a Neeskens Kebano cross completed Villa's misery.
Luiz was sent off just past the hour for a soft head butt on Mitrovic who fell to the ground theatrically.
Villa's sixth defeat in 11 league games left them in 17th place with nine points and only out of the relegation zone because they have scored two more goals than Wolves.
Gerrard looked grim-faced as the final whistle sounded, walking quickly down the tunnel.
For Marco Silva's Fulham the picture looks far brighter as they climbed to ninth spot with 15 points thanks to their biggest win in the Premier League for nine years.
Villa face Brentford at the weekend but the club's hierarchy decided that there was no time to waste with the team's confidence shattered and a relegation battle looming.
Gerrard appeared resigned to his fate after the game and made no attempt to sugar-coat his position.
"I thought I picked a team that could build on the performance (against Chelsea) at the weekend, but I got the opposite," Gerrard told Amazon Prime.
"We were second best for the majority of the first half and were lucky to still be in the game at halftime, it was down to out keeper making some outstanding saves.
"The performance was nowhere near good enough."
Fulham were far more hungry than Villa throughout.
Willian forced a great save from Emiliano Martinez before Fulham went ahead when the keeper punched a corner out to Reed who took a touch and smashed a shot into the net.
Villa still looked capable of salvaging something but not after Luiz got involved with Mitrovic in what Gerrard later described as a "moment of madness".
After checking a VAR screen, referee Michael Oliver showed the red card to Luiz and minutes later Matty Cash stretched to block a Mitrovic shot but the ball struck his arm and Martinez could not save the Serbian's penalty.
Villa were deflated before another error from Mings completed their misery and Gerrard's fate was soon confirmed.