The Wolfpack lost 97-73 at home to 10th-ranked North Carolina on Tuesday to fall to 14-13 overall and 3-11 in ACC play. In the two games before the loss to the Tar Heels, NC State suffered losses of 30 points to Wake Forest and 24 points to Florida State.
"Mark and I met today to discuss the future direction of our program," Yow said in a release. "While it has long been my practice to evaluate the body of work at season's end, in reviewing the overall direction of our program, we believe a change in leadership is necessary moving forward. Our focus now remains on supporting our student-athletes and staff over the final weeks of our season."
In their first game since the announcement, the Wolfpack lost 81-72 to Notre Dame.
An NC State official told ESPN's Andy Katz that Gottfried asked Yow if he could finish the remainder of the season because of his commitment to the players.
Gottfried, 53, was hired by Yow in 2011 and proceeded to go to the NCAA tournament in each of his first four seasons, including a pair of Sweet 16 appearances. He has an overall record of 122-83 at NC State, and he had three years of base salary -- worth an estimated $2.28 million -- left on his deal.
"It has been a privilege to serve as head coach of NC State, and I'm proud of what we have accomplished during my time here," Gottfried said in a release. "NC State is a special place and I appreciate the opportunity to finish the remainder of the season."
NC State said it would begin its search for a successor immediately.
ESPN's Andy Katz contributed to this report.
Gottfried feels NC State still has great basketball to play
Mark Gottfried explains why he believes he was fired as coach at NC State, how the team has fallen on hard times after beating Duke and why he wants to finish the season with the team.