Sporting director Rouven Schröder had already hinted at possible change on Saturday evening, questioning "whether we want to continue in this form" following the humiliating defeat away at SC Freiburg.
Borussia Monchengladbach have lost all three of their opening Bundesliga fixtures this season, conceding 12 goals and scoring just three, leaving them bottom of the table without a single point after three rounds.
Assistant coach Tobias Trulsen has also left the club as part of the reshuffle, with the pair's exit confirmed by the club on Sunday morning.
"Despite a good pre-season and positive signs, the team failed to achieve the desired results in the Bundesliga," Schröder said in a statement. "The recent performances led to the decision to relieve Eugen of his duties with immediate effect."
Reports differed on the exact nature of Polanski's exit, with the Rheinische Post describing it as a resignation while Sky and other outlets reported the initiative came from the club's leadership rather than the head coach himself.
Polanski, 40, had been in charge since September 2025, when he was promoted from his own role as interim boss after the departure of Gerardo Seoane, and went on to guide Gladbach to a 12th-place finish in his first season at the helm.
The head coach has deep ties to the club, having come through its youth academy and made more than 50 competitive appearances for the first team as a player before returning to coach the Foals.
Co-coach Jan-Moritz Lichte, who joined the club's staff in the summer from Manchester City's academy set-up, is set to take interim charge for Saturday's trip to former club Mainz 05, with fellow assistant Markus Gellhaus also supporting the caretaker set-up.
For a longer-term solution, reports in the "Borussia environment" have floated the names of Ole Werner, most recently at RB Leipzig, Horst Steffen, formerly of Werder Bremen, and Alexander Blessin, who left St Pauli, with all three currently without a club and considered possible candidates.