A run of six matches without a win - which included a 5-1 home thrashing by Borussia Dortmund - undermined a promising opening Bundesliga victory away to Augsburg in August.
With the club failing to qualify for the UEFA Champions League after finishing eighth last season, and having lost 1-0 at home to promoted RB Leipzig on Sunday (AEST), Hecking has now been relieved of duties.
"VFL Wolfsburg and Dieter Hecking have ended their co-operation by mutual consent," a club statement confirmed. "For now, Under-23 coach Valerien Ismael will accept responsibility, on an interim basis, of training and preparation for the away match in the Bundesliga with SV Darmstadt 98."
Hecking said: "Of course I am disappointed, but it's part of being a coach that you have to be ready to be sacked when you are not successful.
"I would have liked to continue working with this group but I respect the club's decision."
Sporting director Klaus Allofs added: "Personally, I regret having to take this decision.
"It was a big pleasure to work with Dieter Hecking. We have worked for four years, closely and successfully. Unfortunately we did not qualify for the Champions League despite playing some great matches and we have not managed the turnaround we all hoped for this season.
"After some disappointing results, we came to the conclusion that we need some new impulses from the coaching position."