McClaren had only been in charge for five months after taking over from Nigel Pearson.
Time to go
Derby have only won one of their last nine league fixtures, meaning their hopes of promotion are all but over.
And the 3-0 defeat at the hands of Brighton and Hove Albion on Friday evening prompted the Derby board to act and relieve McClaren of his duties.
The former-England boss made a shock return to the club after being sacked in 2015 after failing to achieve promotion.
McClaren's failure to succeed at the Rams now leaves his managerial career hanging in the balance.
After a very poor spell in charge of Newcastle United and a late plummet down the table when previously in charge at Pride Park, McClaren needed his performance this time around to be a success, in order to get his career back on track.
The 55-year-old may head back abroad, where he has experienced success in the past.
Bookmakers have moved swiftly to install Gary Rowett as the favourite to replace McClaren. However fellow Championship underachievers Norwich City are reportedly also interested.
Mark Warburton is available after leaving Rangers and has a good track record in the Championship.
While Alan Pardew is also high on the list, as he looks for a move back into management.
Roy Hodgson, Chris Powell and Kenny Jackett are also available if Derby wish.