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The Durban club are bottom of the league table after a forgettable season so far, during which they have managed just two wins in 12 games, including the worst attacking record, which has seen them score just five times.
Palmgren, who took charge at Usuthu last September, will temporarily be replaced by assistant Fani Madida.
“We met with the coach this morning (Monday) and advised him that his services have been terminated with immediate effect and informed the players and the technical team of what has happened,” general manager Peter O'Connor said.
AmaZulu’s season had begun in the worst possible fashion when they were hammered 6-0 by Kaizer Chiefs on the opening day of the season, a result they never appeared to recover come.
Apart from losing six more times in the league, they were also dumped out in the first round of the MTN8 and lost in the quarter-finals of the Telkom Knockout.
Their latest defeat came on Saturday when they were beaten 1-0 by Free State Stars in Durban.
Palmgren was only handed a new contact after working on a result-based deal when he took over last season.
And after impressing his bosses with a seventh-place finish, he was rewarded with a two-year deal in the winter, one that lasted a little over six months.
The 49-year-old becomes the seventh managerial change at a Premiership club this season.
Maarten Stekelenberg (Ajax Cape Town), Muhsin Ertugral (Golden Arrows), Augusto Palacios (Orlando Pirates), Roger de Sa (BidVest Wits) as well as Chippa United pair Manqoba Mngqithi and Roger Sikhakane have all left their clubs.
