Celades, who had held roles in the Spain youth coaching set-up and Real Madrid, took the reins at Mestalla in September following the departure of Marcelino.
Since the resumption of Spanish football in recent weeks, they have won just one of their four matches, and lost to local rivals Villarreal on Sunday.
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They currently sit eighth in La Liga, and have dispensed with the 44-year-old's services.
"Valencia CF have communicated to Albert Celades his removal from his position as first team coach, with immediate effect," a club statement read.
"The club wish to thank him publicly for his work and dedication during his time at the club -a period in which we achieved qualification for the knockout stages of the Champions League and important victories at grounds where we had previously not won.

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"The club also value his help and contribution since he took over as coach of the first team in a moment of difficulty, and wish him every success in his future endeavours.
"From Tuesday, Voro Gonzalez will take charge of the first team on a provisional basis through to the end of the present season."
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