Forest are bottom of the second tier and Wednesday's home defeat by Middlesbrough left them without a win from any of their first seven league matches.
"Nottingham Forest can confirm that Chris Hughton has been relieved of his duties as first team manager," the club said in a statement.
"The club would like to place on record its appreciation for Chris' efforts. Chris joined the club in a difficult period for everyone in football and around the world and we thank him for the way he has conducted himself during his tenure.
"Steven Reid will take temporary charge of the first team as interim head coach."
Former Newcastle and Brighton boss Hughton has spent less than a year in charge at the City Ground after replacing Sabri Lamouchi in October 2020.
Forest were crowned European champions in 1979 and 1980 but have not played in the Premier League since the 1998/99 season.