The decision was taken following “friendly discussions”, the club said on a verified social media account, thanking the Swede for his “great contribution to the team in the past two years”.
“We sincerely hope everything goes well for Mr. Eriksson's future work and life,” it added.
SIPG were runners-up in the CSL in Eriksson's first year at the club, giving them a place in this season's AFC Champions League, where they reached the quarter-finals.
But Eriksson's fate may have been sealed when they crashed out to South Korea's Jeonbuk Hyundai Motors, embarrassingly losing the second leg 5-0.
Soon after sacking the Swede on Friday, SIPG unveiled former Chelsea boss Andre Villas-Boas as Eriksson's successor.
A club statement said that Villas-Boas “can further enrich the team's tactics”, motivate players and “lead the team to march towards higher goals”.
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SIPG have been among China's big spenders as money pours into the Chinese game. This year they captured Brazilian forward Hulk for a reported 55 million euro ($60 million).
Eriksson coached England from 2001-2006 and went on to lead Manchester City and Leicester City. One of several high-profile foreign names to secure lucrative contracts in China, his first job in the country was at Guangzhou R&F in 2013.
The CSL has a reputation for a quick turnaround of managers and Eriksson is not the first to be shown the door after a period of moderate success.
In 2012, Guangzhou Evergrande replaced Lee Jang-Soo with Marcello Lippi mid-season after the Korean coach had taken them to promotion and the CSL title in consecutive years.
Evergrande also moved swiftly to replace Lippi's eventual successor, Fabio Cannavaro, with Luiz Felipe Scolari after the Italian had guided them to the top of the table last year.