Allardyce lost his job as Three Lions boss last night following a newspaper sting in which he offered advice to bogus businessmen related to transfers.
His tenure lasted just 67 days and he oversaw one game - a 1-0 World Cup 2018 qualifying win against Slovakia.
Shearer, who scored 30 goals in 63 international appearances for England, told BBC Radio 5 Live: “It's incredible and a catastrophic misjudgement by Sam and his advisers.
“I’m angry at the whole situation.
"I didn't think England could stoop any lower from what happened in the summer at the Euros.
“Now here we are, a laughing stock of world football.
"It looks a poisoned chalice. All those managers that have left for right or wrong reasons.
“It's a very, very difficult job - some would say the impossible job."
Gareth Southgate has now taken over as interim manager.