The Dutchman, who replaced Carlos Carvalhal in January, struggled in his first job in English football.
Performances and results have been poor, with the Owls currently languishing in 18th spot in the Championship, having won just once in 10 games.
The 55-year-old was subjected to chants from Wednesday fans for him to be sacked in their last three games.
Luhukay has also angered fans by refusing to pick experienced players like Keiren Westwood and Sam Hutchinson, despite Wednesday’s troubles.
Owls chairman Dejphon Chansiri met Luhukay on Friday - coach Lee Bullen stepped in to take the regular press conference duties ahead of Saturday’s visit of Preston North End - to confirm the manager’s fate.
Chansiri had been urged to axe Luhukay at a fans’ forum at Hillsborough on Wednesday night. Luhukay was in charge for 49 games, winning 16, drawing 14, and losing 19.
Chansiri said: “I would like to place on record my thanks to Jos for the efforts he has given to Sheffield Wednesday.
“But now is the right time for both parties to move on and I wish him all the very best for the future.”
Bullen will take charge of the Owls when they face Preston at Hillsborough tomorrow.