Peter Taylor was appointed in October 2013 following the dismissal of former manager, Martin Allen.
Initially he was given an interim contract while the search began for a full time replacement but a month later he was confirmed in the role until the end of the season.
Under his stewardship the club managed 17th in the league, safely out of the relegation zone but Taylor has been plagued by a run of poor results this season.
They are currently only two points above the relegation zone following a 3 - 1 defeat to Bristol City at the weekend. They've won just six of their last 23 matches.
Assistant manager Andy Hessenthaler will lead the club at Port Vale on Saturday.
Gillingham FC have confirmed on that manager Peter Taylor has been relieved of his duties with immediate effect.
According to the club's website, Chairman Paul Scally, has asked the coaching staff to assist Andy Hessenthaler with this weekend's game against Port Vale.
Gillingham will discover their opponents for the Johnstone's Paint Trophy Southern Area semi-finals on Saturday morning.
Following the completion of all quarter-final matches last night, the Gills know they will face League One table toppers, Bristol City, Coventry City or Leyton Orient in the last four.
If they do progress they will be in the Southern Area final - played over two legs - with a trip to Wembley awaiting the winners of that tie to face the Northern Area victors.
Peter Taylor's side made it into the Southern Area semis after a 2-1 win at Crawley on Tuesday night
According to the Gillingham FC website, Chairman Paul Scally held a meeting with the first team squad after training to confirm Peter Taylor's appointment as permanent manager.
He will remain with the club until the end of the 2013/2014 campaign.
Mr Scally said, “The players and I are delighted that Peter has agreed to stay on at the club and we wish him every success in his on-going efforts to push the team up the table.”
Peter Taylor has been appointed as Gillingham FC's permanent manager, the club has announced.
Gillingham took the lead through Danny Kedwell's far-post header, but Chris Robertson equalised for the home side with a close-range header.
Vale mounted pressure after the interval and it was no surprise when half-time substitute Pope headed home in the 63rd minute.
Peter Taylor is no stranger to the South Coast. He has managed a number of teams in the Meridian region.
He started his management career with Dartford between 1999 - 2000. Between 1993 - 1995 he was at Southend Sunited, before moving back to Kent to look after Dover Athletic between 1995 - 1996.
His first stint in charge of Gillingham was in 1999 - 2000 when he took to the Division Two play-off finals and the FA Cup Fourth Round.
In 2001, he took over at Brighton and Hove Albion.
A statement on the club's website from chairman, Paul Scally said: "I have received already a huge response from potential new candidates such that the process of considering a replacement manager is clearly going to take some considerable time.
"With that in mind... I contacted Peter Taylor this afternoon to ascertain whether he would consider coming back to the Club on an 'interim manager' basis pending a full time appointment to be made in the weeks ahead.
"I am delighted that Peter has accepted this role and he will take responsibility for the team with immediate effect, meeting the Management and Players tomorrow morning, and taking charge of our game against Preston on Saturday and thereafter until a permanent appointment is made."
Gillingham chairman Paul Scally has been speaking to our reporter, Derek Johnson, about why he sacked his manager Martin Allen and how he hopes it will improve the atmosphere in the dressing room.
Listen to his interview from Dubai in full:
Martin Allen was appointed manager of Gillingham FC in July last year.
He was presented to the media at press conference by chairman Paul Scally who spoke about Allen as an 'outstanding candidate.'
Watch again what Mr Scally said at the time.