The Portuguese coach's dismissal comes after a run of poor form left the Hornets in tenth place, five points above the relegation zone.
The news has, however, come as a surprise to many given Silva's impressive beginning to life at Watford.
| #watfordfc has parted company with Marco Silva.— Watford FC (@WatfordFC) January 21, 2018
The Club will seek to make a swift appointment and there will be no further comment until that appointment has been made.
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A statement from the club claimed that the team's decline in form came after an "unwarranted approach" for Silva from another Premier League club.
Silva was a known target for Everton after the Merseyside club parted ways with Ronald Koeman.
The statement read: "
“My job is to work hard, together with my players, to improve,” he said after the Leicester defeat. “The board know my opinion about everything. It’s not the best moment but the Premier League is 38 games, not only the last 10.”
He leaves after a run of just one win in 11 matches.
Gazzetta dello Sport have since reported that Watford will appoint Javi Graci, who most recently coached Rubin Kazan in Russia, as their new manager.
According to @Gazzetta_it Watford are set to appointment Javi Gracia as their new head coach. Gracia did a fantastic job at Malaga before struggling in Russia (language barrier an issue). He speaks fluent English though. #watfordfc— Andrew Gaffney (@GaffneyVLC) January 21, 2018
The Spaniard impressed while in charge of Malaga prior to his move to Russia, and will reportedly sign a contract until 2019.
Gazzetta claim that Graci's first game will be next weekend's FA Cup fourth round clash against Southampton.