Coach pays the price after hotly-tipped side lost to Wales in Euro 2016 last eight. Belgium, who had been the top-ranked side in the world during Wilmots' tenure, want a new boss in place before the World Cup qualifiers.
The future of Wilmots had been unclear ever since the 3-1 humbling by Wales in France but the axe has finally fallen after weeks of talks over compensation.
Belgian FA president Francois De Keersmaecker did not mince his words.
"The objectives set for the Euros were not achieved. We need a new momentum," he told a press conference.
A search is under way for a coach with international experience to take over before a friendly against Spain on September 1, which comes ahead of the World Cup qualifiers.
Former Schalke midfielder Wilmots led the Red Devils to the quarter-finals of the 2014 World Cup and they even topped the FIFA rankings thanks to a star-studded squad including Chelsea's Eden Hazard and Manchester City's ex-Wolfsburg attacker Kevin De Bruyne.
But they were deservedly beaten by Wales earlier this month and despite their clear talent, Belgium remain without a major trophy.