The 46-year-old left Burnley to join Bolton in January 2010 and the Scot was dismissed on Tuesday after the Trotters won just three of their opening 10 matches to languish down in 18th place in the 24-team league.
His final game in charge ended in a 2-1 defeat at Millwall on Saturday which left the club, who were expected to immediately challenge for promotion back to the top flight, just three points above the relegation zone.
Chairman Phil Gartside said in a statement on the club’s website (www.bwfc.co.uk): “Owen poured his heart and soul into the job, both on and off the pitch, and he led our club with great dignity during some very challenging times.
“It is the right time for a change. We set a target at the beginning of the season and want to get back on track.”
Coyle, who also played for the club in the 1980s, said: “I have always been driven to act in the best interests of the club and care passionately about it.
“I had fantastic times here as a player and it has been a privilege to have held the post of manager.”
Academy manager Jimmy Phillips and head of academy coaching and development Sammy Lee would take temporary charge of the first team squad, the club said.
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