Wolves slipped to their fourth defeat of the campaign with a 2-0 loss at West Ham United on Saturday, a result that left them in 18th place with six points from eight games. Lage was fired on Sunday.
Wolves chairman Jeff Shi said on the club website: "Bruno is an excellent coach, a hardworking and dedicated manager, and a warm, wise and honest man.
"He and his staff have been a pleasure to work with throughout their time at Wolves, so it is with much sadness that we have had to make what has been a difficult decision."
Lage, 46, took over at Molineux from Portuguese compatriot Nuno Espirito Santo before the start of last season, guiding Wolves to 10th in the standings.
Wolves, who have won only once in their last 15 league matches, have struggled in front of goal with their three strikes this season the lowest in the top flight.
A hefty transfer window outlay of more than £100 million ($A175m) in a bid to improve on last term's tally of 38 league goals had raised expectations at Molineux.
Wolves brought in Portuguese internationals Goncalo Guedes and Matheus Nunes - the latter for a reported club record fee - and last month signed veteran striker Diego Costa on a free transfer after injuries to Sasa Kalajdzic and Raul Jimenez.
However, their only win this season came against Southampton - a 1-0 home victory in early September - and they have failed to score in five of their eight league games.
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