The 34-year-old departs with the Saints sitting eighth in the Women's Championship table following a run of seven league games without a win.
Allen was appointed in the summer after guiding London City Lionesses to safety in her first managerial role the previous campaign.
Former Saints manager Marieanne Spacey-Cale, who had moved into a director of women's football role, will take temporary charge until the end of this season.
Southampton said the interim period will "allow the club the time to properly identify a suitable replacement".
"We would like to thank Remi for her efforts during her time at the club," Southampton said in a statement on the club website, external.
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