Despite a first win in 13 games, Reading parted company with their manager.
The Royals are five points above the bottom of the table.
In his last 15 league matches in charge of the club, Paunovic had only won two of them.
Paul Ince, a former England captain, will take charge of the Royals on an interim basis.
Academy manager and former Reading player Michael Gilkes will assist Ince, whose son Tom also joined the club on loan last month, while the Royals search for a permanent manager.
Paunovic was appointed in August 2020 and left after 18 months.
Less than 30 minutes after the club's win at Preston, Paunovic revealed in his post-match interview that he had been relieved of his duties before the game.
The decision was best for the club, according to Paunovic.
I am aware of the things that are happening and the negative vibes surrounding me.
I never thought it was fair, but I don't think the team needs it at this point.
I want the team to excel and I want the best for the club. I have a lot of respect for the opportunity and the time I have spent at this club.
I just wanted to do the best for the club and we reached an agreement where this was the right time to make this decision for the future of it.
Reading ended a seven-game losing run in the league with a point at Peterborough on Wednesday, keeping a first clean sheet since October.
They had conceded 28 goals in their previous nine games, including a 7-1 loss at home to Championship leaders Fulham and a 2-1 loss away to sixth-tier Kidderminster Harriers in the FA Cup third round.
Paunovic was given the job on the eve of the 2020-21 season.
He oversaw an impressive start to his tenure as the Royals were surprise early Championship leaders that season, winning seven and drawing the other in their first eight matches.
They missed out on the play-offs, finishing seven points adrift.
A lengthy injury list, a transfer embargo, a six-point deduction and an embarrassing FA Cup third round exit are just some of the issues that Paunovic has had to contend with this season.
Reading has had five managerial changes in less than three years.
All Rights Reserved © 2024
