Foda's assistant Thomas Kristl has also left the club. Coaches Oliver Schäfer and Gerry Ehrmann will take charge of the first team on an interim basis.
"We had many serious discussions after the 4-0 defeat to VfR Aalen and analysed the situation," said club chief executive Stefan Kuntz. "The decision is not an easy one, but we believe it's the only way of halting this downward spiral and making sure our aims for this season remain realistic."
Kaiserslautern were denied an instant return to the Bundesliga last season after defeat to TSG 1899 Hoffenheim in their promotion play-off. They lie in fourth place in the Bundesliga 2 standings at present, having won three of their first five games. However, their last outing saw them slump to a humiliating 4-0 defeat at VfR Aalen.