Ms Callan, who gave no hint that she was about to depart her role on Monday, when she fielded analysts' questions about the losses in her usual breezy style, is to stay at the bank, working in "a senior capacity" in investment banking. Nevertheless, the move represents a demotion for one of Wall Street's most powerful women, who was appointed only last December.
Lehman announced that Ms Callan would be replaced by Ian Lowitt, Lehman's co-chief accounting officer. The bank has also replaced its chief operating officer, Joseph Gregory, with Herbert "Bart" McDade, head of equities.
Richard Fuld, Lehman's chairman and chief executive, said that the removal of Mr Gregory had been "one of the most difficult decisions either of us has had to make", but made no comment about Ms Callan.
Her departure leaves very few women in the higher echelons of Wall Street. Sallie Krawcheck, former Citigroup CFO, and Zoe Cruz, ex-co-president at Morgan Stanley, were in turn regarded as the Street's top women, but both lost their jobs last year.
Ms Callan rapidly became the public face of Lehman as it tried to maintain investors' confidence. She earned respect among analysts by giving straight answers to questions, and was lauded last month in The Wall Street Journal as "a galvanizing force at Lehman and a finance chief who topples much of the conventional wisdom about CFOs".
Investment banks are desperate to attract talented female employees. Lehman's Europe and Asia chief executive, Jeremy Isaacs, has spoken frequently about the need to attract more women, and the bank sponsors a centre for women in business at London Business School.
However, the dwindling number of women at the top of the sector could undermine efforts to hire and retain female employees. "This is the ultimate test of whether they can keep that talent," Alison Maitland, a senior visiting fellow at Cass Business School and author of Why Women Mean Business, said.
"What leads talented women to leave companies is not so much having kids and wanting to stop work; it is more a case of looking at the senior ranks and not seeing anyone there like you."
There is no suggestion that Ms Callan's gender played any part in her removal. Many senior male Wall Street bankers have lost their jobs during the credit crunch, including Stan O'Neal, chief executive of Merrill Lynch, and Chuck Prince, deposed as the boss of Citigroup.
Confidence in the 42-year-old Harvard graduate had been ebbing for some weeks. A public spat with David Einhorn, a hedge fund activist who accused her of understating Lehman's troubles, did not help. There was also confusion after she made a relatively upbeat speech at a banking conference in May, only for analysts to start slashing earnings forecasts soon afterwards.
Lehman on Monday said it had raised $6bn (£3bn) to try to quell rumours about its financial position. The bank's projected $2.8bn net loss for the first quarter – its first since going public in 1994 – was bigger than expected, as was the size of the capital raising. Ms Callan said the fundraising was designed to end the "chatter" that had dogged Lehman, dragging down its share price.
Unfortunately, this chatter continued this week with mutterings about the company losing prime brokerage business. Its shares continued to slide. Yesterday, they closed down 4.4 per cent.
"They are under an awful lot of pressure to show they are making changes and someone had to lose their job over this," one banking analyst said. "This way the chairman gets to keep his job."
Women at the sharp end on Wall Street
Fired
*Sallie Krawcheck,ex-CFO, Citigroup
Joined Citi in 2002, and was soon viewed as a potential chief executive. But she failed to get a grip on Citi's costs and moved to head wealth management last year.
*Erin Callan,ex-CFO, Lehman Brothers
Her open approach was seen as a breath of fresh air. But the former tax lawyer paid the price for the bank's mixed messages.
*Zoe Cruz, ex-co-president, Morgan Stanley
A protégé of John Mack, Morgan Stanley's chief executive. Known as "Cruz missile", she rose from the trading floor, but as write-downs mounted, Mr Mack fired her.
Hired
*Amy Woods Brinkley, chief risk officer, Bank of America
Responsible for protecting the bank from all kinds of risk, from personnel matters to interest rate fluctuations and credit risk.
*Terri Dial, head of consumer banking, Citigroup
Joined Citi from Lloyds TSB to run its underperforming consumer business. She was known as a whirlwind during her three years at Lloyds, where she revived retail banking.
*Heidi Miller, CEO treasury services, JPMorgan
Named as one of the five most powerful women in banking in 2006. JPMorgan was strong enough to pick up Bear Stearns at a bargain price.
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