Allen, 46, was appointed in April 2011 in controversial circumstances, having only agreed to take the manager's job at Barnet the previous month.
He steered the Magpies clear of relegation last season and had won his previous two games prior to the defeat at Hartlepool.
But, with the club in 11th place in League One, the decision has been made to dismiss the former Barnet, Brentford, MK Dons, Leicester City and Cheltenham Town manager.
Former Notts County defender Dean Yates, who was part of the BBC Radio Nottingham commentary team at Hartlepool, said: "I'm in as much shock as everyone else.
"I heard Martin doing his interview after the game and everything seemed as it should do. Ok, we've just had a really disappointing performance and a bad result, but I could not see this coming. It's a real shock."
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