Owners Fawaz Al Hasawi and Abdulaziz Al Hasawi say they have made the decision because they want a manager with “Premier League experience”.
Former Republic of Ireland international O’Driscoll, who left Crawley in the summer to take over at the City Ground, leaves Forest eighth in the table. Reds chairman Fawaz Al Hasawi admits the timing of O’Driscoll’s departure is unfortunate.
He said: “We cannot speak highly enough of Sean as a man.
“He was appointed at an extremely difficult time for the club and can count himself unlucky to have lost his job with the team just one point away from the top six. But we have a responsibility to look to the future for this great club because we have huge ambitions for it.
“We feel we have developed a really strong squad of players but are still searching for consistency, underlined by the fact that we have not won more than two games in succession in the Championship. And with the January transfer window approaching, we feel it’s the right time to make a change.”
Earlier Billy Sharp had inspired Forest to come from a goal down to beat Leeds 4-2 at the City Ground.
Paul Green fired Leeds into an early lead but Sharp won a penalty when Tom Lees brought him down and converted it to draw Forest level just before the break. Sharp fired Forest ahead early in the second half and Rodolph Austin turned Elliott Ward’s cut back into his own net. Dexter Blackstock made it three goals in seven minutes before substitute Davide Somma pulled a goal back for Leeds at the death.
Cardiff extended their lead at the top of the Championship to five points after substitute Aron Gunnarsson nodded home the winning goal in a 2-1 win over title rivals Crystal Palace.
Third-placed Hull were held to a goalless draw with Leicester.
Middlesbrough keep their automatic promotion hopes alive with a 1-0 victory against Blackburn through a Lukas Jutkiewicz goal.
Goals from Lee Tomlin, Tommy Rowe and Dwight Gayle saw Darren Ferguson’s Peterborough thump troubled Wolves 3-0.
Curtis Davies settled a thrilling contest in Birmingham’s favour against fellow strugglers Barnsley with a 2-1 victory at Oakwell. Davies was on target in each half, sandwiching an equaliser from Jonathan Greening.
Mamady Sidibe scored his first Sheffield Wednesday goal as Dave Jones’ side secured a 1-0 triumph at out-of-form Bolton.
Burnley saw off Derby 2-0 at Turf Moor while DJ Campbell and Daryl Murphy fired Ipswich to a 2-1 victory at free-falling Charlton. Blackpool and Huddersfield drew 1-1.