He has paid the price for a wretched run of results after an unlucky 13 matches in charge.
Chairman Dick Knight has put director of youth Martin Hinshelwood in caretaker charge for tomorrow's match away to Plymouth Argyle.
Knight said: "It's sad, but after the run of results we have to act in the best interests of the club.
"It has got to a point where Jeff has not been able to motivate the team and we are in a relegation battle. The decision has been made with the full support of the Board."
Knight rang Wood at his Essex home last night to break the bad news.
The Seagulls' axed boss is recovering from minor surgery to repair torn knee cartilages at a Brighton hospital yesterday morning.
Adevastated Wood said: "I had a phone call from the general manager Nick Rowe yesterday afternoon when I got back, so I had an inkling then.
"I could do with a little bit more of the anaesthetic I had for the op.
"I know how hard that I and my staff have been working on the training pitch and behind the scenes. It's just unfortunate that our results have not matched those efforts.
"It has been a 24-hour-a-day job for us all, but that counts for nothing if you don't get the results."
Wood has been househunting in the Brighton area recently with wife Sandra.
"There is a lot of sadness there," he added. "For two-and-a-half years the club has been a massive part of my life."
The 45-year-old former Charlton goalkeeper arrived at the club in December 1996 as assistant manager to his old team-mate Steve Gritt.
They steered Albion to safety from a seemingly impossible position at the foot of the Football League and Wood was retianed as No. 2 when Gritt was sacked in February 1998 and Brian Horton took over.
When Horton quit in January to take charge of Port Vale, Wood was appointed caretaker. He was given the job for the rest of the season following consecutive home wins against Scarborough and Peterborough and celebrated with a draw away to Swansea.
But an awful run since then of one point from the last 30 has turned Albion from play-off contenders into relegation candidates.
The final straw was Tuesday's 3-1 home defeat by table-topping Cambridge United, when supporters called for Wood's head.
Added Knight: "It is hugely upsetting to all of us. Jeff was a popular choice with the fans, the Board and the local media to succeed Brian Horton, but we have had to act now because we are in danger of being sucked into relegation."
Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.
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