It is understood Moyes was axed by vice-chairman Ed Woodward during a meeting at the club's Carrington training ground shortly after 0800 BST on Tuesday.
A club statement read: "Manchester United announces that David Moyes has left the club.
"The club would like to place on record its thanks for the hard work, honesty and integrity he brought to the role."
The club later confirmed Giggs would be handed the reins for the time being - United host Norwich in their next game on Saturday.
It added: "Following the departure of David Moyes as manager, Manchester United has announced that Ryan Giggs, the club’s most decorated player, will assume responsibility for the first team until a permanent appointment can be made.
"The club will make no further comment on this process until it is concluded."
The news of Moyes' exit had been expected after it was widely reported on Monday afternoon that the Scot was to be axed in the wake of Sunday's 2-0 defeat at his former club, Everton.
In the immediate aftermath of Moyes' departure, Louis van Gaal was the bookies' favourite to become the next permanent United manager. He is currently due to lead the Netherlands at this summer's World Cup.
Sky Bet also had Borussia Dortmund's Jurgen Klopp and Atletico Madrid manager Diego Simeone towards the head of their early market.
However, Klopp, who signed a new five-year deal at Dortmund back in October, was quick to rule himself out of the running, telling The Guardian: "Man United is a great club and I feel very familiar with their wonderful fans. But my commitment to Borussia Dortmund and the people is not breakable.''
Moyes, appointed on a six-year contract only last summer, took over a team crowned champions last season.
However, a miserable campaign has seen them fail to qualify for the Champions League for the first time in almost 20 years and the Red Devils currently sit seventh in the Premier League table.
Moyes, who spent 11 years at Everton before moving to Old Trafford, always knew he had a tough act to follow with his predecessor Sir Alex Ferguson regarded as the most successful British manager of all time.
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But few could have predicted the season would go as badly as it has with United having lost 11 of their 34 league games so far. The run means are are struggling to even qualify for the Europa League.
United are guaranteed to end the season with their worst points total in Premier League history and Moyes' home record is the worst of any United boss since 1978 when Dave Sexton was in charge.
Moyes spent more than £60million on recruiting Juan Mata and Marouane Fellaini in the last two transfer windows and there have been suggestions that the club is prepared to throw another £200million at improving the squad this summer.
Moyes was dogged by claims he was not up to the job ever since he took over last July.
The manager had enjoyed 11 critically-acclaimed years at Everton, leading the club to five top-six finishes. The Toffees qualified for the Champions League for the first time under Moyes' stewardship - although they lost in the qualifying stages of the competition - and he also took the Merseyside club to the FA Cup final in 2009.
But all those achievements were small fry compared to what his predecessor achieved.
The enormity of the task in hand seemed to overwhelm Moyes from day one.
Moyes upset some within the club by bringing in his own coaching staff, while the likes of Rene Meulensteen, Eric Steele, and Mike Phelan departed.
Moyes also botched his first transfer window as United boss. The Scot pursued Barcelona's Cesc Fabregas when the Spaniard had no intention of leaving the Spanish giants.
Thiago Alcantara joined Bayern Munich ahead of United, while the club made a real hash of their attempts to sign Fellaini and Leighton Baines on the cheap.
United's bid of £28million for the pair was branded "derisory and insulting" by Everton.
Baines stayed and United ended up buying Fellaini for £27.5million when they could have bought him for £4million less had they acted quicker.
Moyes rarely looked comfortable in front of the cameras, and for that reason many felt Jose Mourinho, who left Real Madrid to rejoin Chelsea last summer, would have been a better option.
It is understood no decision has yet been made on the futures of the coaches Moyes brought into United - Steve Round, Phil Neville, Chris Woods and Jimmy Lumsden.
Rumours of player unhappiness with Moyes' tactics training methods persisted throughout his reign, although the Scot always denied there were any problems.
In December, Rio Ferdinand questioned Moyes' policy of naming his starting XI on the day of the game, claiming it turned him into a "madman" wondering whether he was to be selected.
Shortly after United's embarrassing 2-0 defeat at Olympiacos, Robin van Persie complained about his team-mates running into his space on the pitch.
The shock news that Danny Welbeck, an academy graduate born in Manchester, wanted to leave the club, did not go down well with the United hierarchy.
Moyes also oversaw the exit of highly-respected club captain Nemanja Vidic, who will leave for Inter Milan in the summer.
Another senior figure and dressing room stalwart Patrice Evra may follow the Serbian out the door when his contract expires.
Moyes succeeded where Ferguson failed in tying Wayne Rooney down to a long-term contract.
Goalkeeper David de Gea and Adnan Januzaj have also developed well during Moyes' reign, but that cannot be said for the rest of the squad and many supporters became disenchanted with the slow and methodical style of play on show at Old Trafford this year.
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