The decision was made after Cheltenham slumped to a 3-0 defeat to Peterborough United, a loss that extended their winless league run to eight games.
Elliott leaves with Cheltenham rock bottom of League One, four points adrift of 21st-placed Reading.
He was given the role of manager back in 2022, replacing Michael Duff after Barnsley swooped to appoint him as their head coach.
Elliott led the Robins to a 16th-placed finish last season but a sluggish start to the current campaign has led to his dismissal.
A statement released by Cheltenham read: “Cheltenham Town have today parted company with first-team manager Wade Elliott by mutual consent.
“The directors would like to place on record their appreciation for Wade’s contribution since joining the club as a coach in September 2020, playing a significant role in the League Two title win and then the club's highest finish alongside Michael Duff.
"He was named head coach last summer and went on to achieve the club's second highest finish in his own right.
“Assistant manager Kevin Russell has been asked to take interim charge of the team against Stevenage at The Completely-Suzuki Stadium on Saturday.”