The 38-year-old, who has only been in the job for six months after taking over from Nigel Pearson in November, was widely reported to have been suspended last week in the wake of an interview he gave questioning the lack of money made available to him in the January transfer window.
Hull's owners Assem and Ehab Allam took exception to the comments and confirmed Barmby's dismissal on Tuesday, claiming the former England international has misled fans with his comments.
"Following recent speculation in the media Hull City can now confirm that following a brief period of suspension Nick Barmby has today been dismissed from his role as first-team manager with immediate effect," a statement read.
"The reason for the dismissal relates to certain comments made by Nick in recent interviews.
"The comments concerned were wholly misleading and implied that the board had not made funds available to Nick to strengthen the first-team squad during the January transfer window.
"Such is not only completely untrue, the comments made by Nick contradicted the board's publicly stated position that funds would be made available to Nick during the January transfer window.
"As stated in previous interviews, the board accepted every transfer request from Nick and in fact actively encouraged him to strengthen the squad should he feel it was necessary.
"The board consider the comments made by Nick unjustifiably cast public doubt on the honesty and integrity of the board and its members.
"The relationship between the manager and the board is of prime importance to the success of any football club. In making the comments Nick made, he completely undermined the trust and confidence that needs to exist between the team and board."