Popular former Chelsea boss Ranieri, who led Leicester City to an unforgettable title triumph in 2015-2016, only managed three wins in 17 games in charge of Fulham.
His tenure also included a 2-1 defeat to League Two Oldham in the third round of the FA Cup and the Southampton loss was the Cottagers' fourth consecutive top-flight reverse.
The result left Fulham 10 points from safety with as many matches remaining this season and travelling supporters aimed chants of "you don't know what you're doing" in Ranieri's direction at St Mary's.
Former England midfielder Scott Parker will take over on an interim basis until the end of the campaign.
Slavisa Jokanovic led Fulham to promotion from the Championships via the play-offs last season and oversaw an ambitious close-season recruitment drive.
Jean Micheal Seri, Andre-Frank Zambo Anguissa, Aleksandar Mitrovic and Alfie Mawson were among those brought in among an outlay that neared £100million.
High-profile loan additions such as Andre Schurrle, Luciano Vietto, Timothy Fosu-Mensa and Sergio Rico also arrived, but a wretched start to the season yielded five points from 12 matches and cost Jokanovic his job.
Ranieri was appointed simultaneously in a move that was now infamously described as "risk-free" by Fulham chairman Shahid Khan.