The Kings announced Malone's fining on Monday. The move was first reported by Yahoo Sports on Sunday.
Malone went 39-67 after being hired in June 2013 by new owner Vivek Ranadive. Malone was hired before General Manager Pete D'Alessandro in what was considered an unusual order of events. Now D'Alessandro will get the opportunity to hire his own coach.
Lead assistant Tyrone Corbin will take over as interim coach, the person with knowledge of the moves said. Corbin went 112-146 in three-plus seasons as coach of the Utah Jazz and was not offered a contract after last season.
The Kings went 28-54 in Malone's first season and missed the playoffs for an eighth consecutive season. This season got off to a better start with the team winning nine of 14 games.
But the Kings lost their next game and have fallen into a tailspin after star center DeMarcus Cousins was sidelined because of viral meningitis. Sacramento has lost seven of nine games without Cousins and is tied for 10th in the Western Conference with an 11-13 record.
The firing is the first major setback in Ranadive's tenure. He was welcomed as a savior when he bought the Kings from the Maloof family in 2013 and prevented the team from moving to Seattle.
The Kings have already broken ground on a $477-million arena that is expected to open downtown for the 2016-17 season, but Ranadive has so far been unable to reverse the losing trend that followed a stretch of eight straight playoff berths.