An army spokesman says the head of Guinea-Bissau's navy has been fired for allegedly plotting to overthrow Joao Bernardo Vieira, the country's president.
Admiral Bubo Na Tchuto has been placed under house arrest, Arsenio Balde, an army spokesman, said on Friday.
Military officers in the West African tried to stage a coup last week, the armed forces spokesman said.
The allegations agains the navy chief came amid political turmoil in Guinea-Bissau after Vieira dissolved parliament and removed the government.
The country has also come under growing diplomatic pressure to stem a booming cocaine trade through the country.
UN drug experts say the tiny nation of Guinea-Bissau has become one of the key transit points for cocaine headed to Europe from South America.
Two aircraft suspected of being used by drugs traffickers were seized at the country's main airport last month. The seizures led to a stand-off between the judicial police tasked with combating drugs crimes and military personnel who tried to prevent police boarding the aircraft.
No drugs were found but three Venezuelan nationals were arrested.
The airport's two senior air traffic control officials were also arrested, adding credence to suspicions among UN and international anti-drug enforcement officers that officials in Guinea-Bissau's establishment were involved in drug smuggling.
"Planes land and take off any old how ... just as boats dock and leave again without the state authorities even being informed about it," Vieira said on Wednesday at the inauguration of Carlos Correia, the new prime minister.
The old government was dismissed after the supreme court ruled a law extending the parliament's mandate until elections in November was illegal.
Guinea-Bissau, a former Portugese colony, has a history of coup attempts and political strife.
Vieira first came to power in 1980 in a bloodless coup, after he toppled the government of Luis Cabral.
He then ruled for nearly 20 years before he himself was overthrown during a civil war which ended in 1999. Six years later Viera was back from exile and became president in an election marred by accusations of fraud from his opponent.