The Barcelona-based club’s board are reported to have taken the decision this morning, a day after their 2-0 defeat at home to Getafe.
Espanyol have won just two of their opening 13 league games and are a point adrift at the foot.
Barcelona newspaper El Mundo Deportivo indicates Pochettino was dismissed after a meeting with club president Joan Collett and sporting director Ramon Planes.
Reports suggest Marcelinho Garcia Toral is at the top of their wishlist to fill the vacancy.
The 47-year-old made his name at Recreativo Huelva before guiding Racing Santander into the UEFA Cup in 2008.
A surprise switch to Segunda Division side Real Zaragoza came next and he led them back to the top flight before he was sacked in December 2009.
He returned briefly to Racing only to join Sevilla at the start of last season but was fired in February.
Despite being a fans’ favourite due to his stellar playing career with the club – he made over 250 appearances at centre-half – former Argentina international Pochettino appeared to be on borrowed time after supporters turned during yesterday’s game with calls of “resign” pouring down from the stands.
Pochettino joined Espanyol from Newell’s Old Boys in 1994 and stayed for six years.
He then returned, initially on loan, in 2004 after spells with Paris St Germain and Bordeaux.
The 40-year-old took over as coach in January 2009 and led them away from the relegation zone into mid-table safety.
Finishes of 11th in 2009/2010, eighth in 2010/11 and 14th last season enhanced his reputation before this season’s struggles.