The team have picked up only four points in five matches since the season re-started after the COVID-19 hiatus, slipping way behind in contention for Champions League qualification.
Back-to-back defeats by Eibar and Villarreal respectively left them eighth in the standings on 46 points, eight behind fourth-placed Sevilla with six games remaining.
Valencia appointed Celades last September after taking the surprising decision to dispense with Marcelino, who had led the club to successive top-four finishes and ended an 11-year wait for a major trophy by guiding them to win the Copa del Rey.
Champions League
UEFA begins disciplinary investigation into ESL rebels Juve, Barca and Real
Celades had never previously been a first team coach at club level, building his reputation as Spain's under-21 coach and as an assistant to Julen Lopetegui with the Spain side and Real Madrid.
He made a difficult start in losing his first game in charge 5-2 to Barcelona but improved his reputation by taking the team into the last 16 of the Champions League, where they were eventually knocked out by Atalanta 8-4 on aggregate. (Reporting by Richard Martin Editing by Christian Radnedge)
'A massive achievement' - Guardiola reflects on Man City's title win
Ligue 1
The missing mastermind, Turkish Grandpa and Tous avec le LOSC - Lille’s astonishing year