The Spireites are positioned in the National League relegation zone and are five points from safety despite having one of the biggest budgets in the division and being one of the title favourites at the start of the season.
Town lost 3-0 at Solihull Moors on New Year’s Day and have only won one of their last 12 in all competitions.
The decision comes less than 24 hours after Sheridan said he would not resign.
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Former Spireites academy manager John Pembeton has taken over as caretaker manager, while Sheridan’s assistants Glynn Snodin and Mark Crossley have also left the club.
The club say a statement will be made after this weekend’s match against Sutton United regarding the plans to appoint a new manager.
The club is on the verge of being taken over by Chesterfield FC Community Trust and its chairman Mike Goodwin was part of the Sheridan discussions last night.
Chesterfield FC company secretary, Ashley Carson, said: "The decision was taken after full discussion last night with majority shareholder Dave Allen and also with Mike Goodwin, chairman of the Community Trust, who is heading up the potential takeover of the club.
"Whilst I think we all knew the time was right to make this change, it is important that I work very closely with Mike Goodwin, as ultimately we look forward to a change of ownership very soon.
"There will be a joint plan going forward so that any decisions taken regarding the appointment of a new manager will be made in full agreement with the Community Trust."
Sheridan, 55, was re-appointed as boss on January 9 2019 on a three-year contract after leaving League Two Carlisle United in favour of a return to north Derbyshire.
When he took over last season Town were in the National League drop zone but he guided them to safety, eventually finishing 15th.
But they have had a miserable season so far which included not winning any of their first 11 games of the season and losing five consecutive home matches.
Sheridan appeared to question his future as early as September after a 4-0 loss at Sutton United.
On December 6 Sheridan admitted himself that he should have been sacked weeks ago.
In recent weeks he sent out goalkeeping coach Crossley and chief scout Charlie Williamson to speak to the media after games.
In Sheridan’s first spell in charge of the club they won the League Two title in 2011 and the Johnstone’s Paint Trophy in 2012.
The Blues are now looking for their seventh permanent manager since Paul Cook left for Portsmouth in 2015.