The Dutchman has been relieved of his duties immediately after the club was sold to Swiss businessman Markus Hiebherr.
"We wish to recognise Mr Wotte's efforts during a difficult period for all associated with the club. We wish him well for the future," a Southampton statement said.
"Our decision is part of a wider strategic plan being implemented to improve all aspects of the club's operations, both on and off the field. In keeping with this plan we can confirm that the search for a new manager has already begun.
"Our search will be conducted in a systematic and professional manner. We will find the right candidate, who will fulfil the criteria necessary to move the club forward."
Earlier this month, Wotte agreed to take charge of Ismaili and was expected to arrive in Ismailia on July 1st, but he opted to return to Soton after a takeover deal with Pinnacle group fell through.
However, the fresh buyout sent the 48-year-old out in the cold once again as Stewart Henderson has been temporarily appointed at St. Mary's.