The former Bury boss, who has been in charge of the Gulls on a permanent basis since May having impressed as temporary boss, had seen his Gulls side lose to Devon rivals Exeter and then Plymouth within the last week.
Those results left Torquay 23rd in League Two and the board decided to act, putting head of youth Geoff Harrop in charge while they search for Knill's replacement.
"It is with great regret that Torquay United can announce we have terminated the contract of manager Alan Knill," a club statement said.
"The first half of this season has not gone as we all hoped and the Board at Plainmoor believe now is the right time for a change.
"We would like to express our sincere gratitude to Alan for all his hard work at our club and especially his success in helping us stay in League 2 at the end of last season. We all wish him the very best in his future career.
"The search for a new manager begins immediately but, in the meantime, our head of youth Geoff Harrop will take the team for Saturday's game with Morecambe at Plainmoor."
Source : PA