Allen, who led the club to promotion into League One last season, had been in charge for 15 months – but had won only two of 11 league games this season.
Paul Scally, Gillingham's chairman, told the club's website: "It is always a hugely difficult time when a managerial change occurs and this moment is no exception. Whilst the decision taken was made unanimously by the board, it was an exceptionally difficult one but one which after long deliberation was felt absolutely necessary.
"I would like to wish Martin every success in his future career. I have no doubt he will be back managing very shortly and I have very much enjoyed the experience of working with him, on both a business and personal level over the past 16 months."
It can't have helped Allen that the other promoted sides, Bradford, Rotherham and Port Vale have all done well so far this term. Allen has forged himself a career as a pundit off the field with numerous TV and radio appearances.