Mail Sport revealed on Sunday night that Rooney is the clear front runner to become Birmingham manager after doubts grew over Eustace's spell as head coach.
'Eustace departs after 15 months in charge, having helped to stabilise and strengthen the Club on the pitch following his appointment in July 2022.
Birmingham City have confirmed they've parted ways with head coach John Eustace
Wayne Rooney (left) is the clear frontrunner to become Birmingham City's next manager and will join NFL legend Tom Brady (right) at St Andrew's, who owns a minority stake in the club
'In his first season at the helm, he guided the team to a 17th-place finish, securing Sky Bet Championship status with three games remaining.
'During his time at St. Andrew’s, he galvanised the squad to deliver a number of memorable moments in testing circumstances.
'The Club would like to thank John for his contribution. His dedication and work ethic was evident throughout his time in B9 and he will always be welcomed back to St. Andrew’s.
'A new First Team Manager will be announced in the coming days who will be responsible for creating an identity and clear ‘no fear’ playing style that all Birmingham City teams will adopt and embrace.
'The Club will be issuing no further comment at this time'.
Eustace's sacking comes with the Blues sitting sixth in the Championship table after 11 games.
The 43-year-old took charge in summer 2022 and led the club to comfortable survival against a backdrop of financial uncertainty.
He has now overseen a promising opening to the first season under the club's American owners - which includes NFL great Tom Brady.
Brady (right) recently became a minority owner at Birmingham and is known to be friends with Rooney
Rooney confirmed that he believes it's the 'right time' for him to leave MLS side DC United
Brady recently joined the club as a minority owner and is known to be friends with the retired NFL star.
Mail Sport revealed back in September that the club were considering Rooney as a potential replacement for Eustace, following the club's new investment.
Rooney, meanwhile, announced his departure from Washington on Saturday night. He said: 'I think it's just the right time. I've done everything I can to try and get the club into the playoffs. It's not been a single thing which has happened. It's about timing in your career.
'I've really enjoyed my time here. I've had a lot of great help from the owners... I just feel like it's the right time for me to go back to England, first to obviously see my family. I haven't seen them for a long time.'
'And then, what lies ahead? Whether opportunities come up? I've seen a lot of reports in the media. I don't have anything lined up.
'I'm going back there to see my family. If something comes up in October, November, of course I'll look at it.'
Ashley Cole and John O'Shea could be part of a new-look coaching set up headed by Rooney
The United legend will reportedly take two familiar faces with him as part of his backroom set-up, as he looks to bring in Ashley Cole and John O'Shea into his coaching team.
Rooney played with Cole for England and spent many years alongside O'Shea for Manchester United and BBC 5 Live has claimed a deal is in place for the pair to join the former Derby boss in a new-look coaching team at St Andrews.
Cole moved into coaching following his retirement in 2019, first taking a role at Derby before working with Chelsea's academy and the England U21s.