Carlisle lost nine of their final 10 home games last season and drew the other.
And Simpson’s exit was announced three hours after their latest reverse at Brunton Park.
“Everyone at the club would like to thank Paul and his staff for their efforts,” Carlisle said in a statement. , external
The Piatak family, from Jacksonville in Florida, completed a takeover of Carlisle last year and Simpson spoke before the start of the season about “positive things going on” at the club.
But results have continued to be poor and he leaves with the team 20th in the table.
Prior to his time as a player at United, Simpson’s career included spells at Manchester City, Derby County and Wolves.
As well as his two stints in charge at Carlisle, he has managed Preston, Stockport, Shrewsbury, Rochdale and England’s under-20s side, leading them to victory at the Under-20 World Cup in 2017.