The Brazilian Football Federation have confirmed Dunga has been dismissed following the country's elimination from the World Cup.
Dunga indicated he was likely leave his post after Brazil's hopes of a sixth World Cup triumph were ended by Holland in Port Elizabeth on Friday.
"Ending the cycle of work that began in August 2006, and ended with the elimination of Brazil from the World Cup in South Africa, the CBF announces that the technical committee of the national team has been released," the statement on the CBF's official website read.
"The new technical committee will be announced later this month."
Brazil let slip a 1-0 half-time lead to suffer a shock 2-1 loss to the Dutch.
They had started the tournament well, wins over North Korea and Ivory Coast and a draw with Portugal seeing them progress from the 'Group of Death' in first place.
They swept Chile aside 3-0 in the last 16 and looked to be cruising when they took a 1-0 lead over Holland through Robinho.
They missed several chances to extend their lead before a defensive mistake gifted Bert van Marwijk's men an equaliser and Wesley Sneijder headed a winner.
Dunga, 46, took up the post following the Selecao's elimination from the 2006 World Cup in Germany, signing a four-year deal.
After losing to Holland he said: "I have been contracted for four years and we knew this right from the start.
"During the last four years, I have been very happy to coach this Brazil team and if you were to look at our players' faces now, you would probably understand how they feel."
Leonardo has been linked with the job after leaving AC Milan at the end of last season.