The Minstermen - just one place above the relegation zone - fear a return to the National League North and have just one win in seven attempts.
Saturday's 2-0 defeat to Barnet was the final straw for the owners after a year of high-profile captures in the hope of pushing for promotion.
The former Wimbledon and Solihull Moors manager lasted in the role for 34 matches and had a win percentage of less than 30%.
Co-chairs Matt and Julie-Anne Uggla said: “We’d like to thank Neal for his contribution to this incredible club both on the pitch and behind the scenes.
"We wish him well for the future. We now look forward to the next chapter for York City. We are working hard to be able to upstate the fans on the new appointment.”
The club said on their website: "York City FC have today confirmed the immediate departure of Manager Neal Ardley. "He will work with the owners on a smooth transition and Tony McMahon will be appointed interim manager. A search is already underway for a permanent replacement."