Roberto Donadoni, Italy head coach, lost his job following the world champions' Euro 2008 quarter-final defeat by Spain, according to the Italian Soccer Federation (FIGC).
The FIGC did not have to formally dismiss the 44-year-old as the two-year contract extension he signed just before the Euro tournament was conditional on Italy reaching the semi-finals.
They exited after a penalty shootout on Sunday, failing to make the final four.
"The Federation considers the contractual relationship with Roberto Donadoni to have run out at its natural expiry date," the FIGC said in a statement on its website.
According to media reports, the FIGC is expected to announce the return of Donadoni's predecessor, Marcello Lippi, 2006 World Cup-winning boss, early next week.
"Today president [Giancarlo] Abete received national team coach Roberto Donadoni at the FIGC's offices to assess the work done over the last two years and the performance at the European championship," the statement added.
"In confirming his appreciation for the seriousness and skilled professionalism that distinguished his work at the helm of the national team, president Abete president also informed the coach of the decision."
Donadoni, who took charge in July 2006 after Italy's World Cup triumph in Germany, paid the price for the Azzurri's tired and uninspiring showing at Euro 2008, where they won just one game from four.
The former Italy and AC Milan midfielder was unrepentant after Sunday's defeat, saying he was proud of his side's performance and had no intention of quitting.
However Abete's failure to back Donadoni in post-match interviews on Sunday indicated a change was imminent.