Separate reports from Yahoo Sports said that assistant coach James Borrego is expected to take over as the team's interim coach and that Scott Skiles is a "serious candidate" to become the head coach.
Orlando failed to make the playoffs in 2012-13 and 2013-14 and has fallen out of the race this season.
The Magic have lost 10 consecutive games, and 16 of their last 18, to fall to 15-37, the third-worst record in the Eastern Conference.
In the offseason, Orlando picked up the fourth-year option on Vaughn's contract, which guarantees he will be paid his salary for the 2015-16 season.
Vaughn replaced Stan Van Gundy as the team's head coach in July 2012. Prior to taking over in Orlando, he served as an assistant for the San Antonio Spurs.
Orlando hosts the Los Angeles Lakers on Friday.