Mullen only took charge of the Saddlers in the summer and was forced to undertake a major squad rebuilding programme ahead of the new season.
A statement on the club's official website read: "After careful consideration, the board has taken the decision to terminate the employment of Jimmy Mullen as first-team manager with immediate effect.
"The decision has been taken as a result of a sequence of disappointing results, particularly at home games, which has been damaging to attendances.
"The board wish to express their appreciation for the efforts of Jimmy Mullen last season, when his arrival as assistant to Richard Money was an important factor in improving the playing fortunes of the team.
"This is not the outcome we desired, but feel that with the season reaching the halfway stage, it was necessary to take this decision in the best interests of the club."
John Schofield, the former Lincoln City manager who spent the latter part of last season working as a member of the Iron's backroom staff, has been placed in charge of first-team affairs on a caretaker basis at the Bescot Stadium.