"The management committee decided Muricy Ramalho is no longer coach of Santos FC's professional team. The trainer was told of the decision on Thursday," the club said in a statement on their website on Friday.
They added that their under-20s coach Claudinei Oliveira will take charge of the first team for their third Brazilian championship match of the season at home to Gremio at Vila Belmiro on Saturday.
Ramalho, who turned down the Brazilian Football Confederation's (CBF) offer to take charge of Brazil's World Cup squad when he was at Fluminense in 2010, is the first coaching victim of the championship that kicked off last weekend.
Santos drew 0-0 with Flamengo in their championship opener at the revamped World Cup stadium in Brasilia on Sunday amid the fanfare of 21-year-old forward Neymar's last appearance for the three times South American champions.
Neymar said on Saturday he was moving to Barcelona where he will complete his transfer and be presented on Monday.
Under Ramalho, who took charge in April 2011, Santos won their third Libertadores Cup, the Paulista state championship twice and the South American Supercup.
Having presided over 72 wins and 42 draws in 150 matches, he leaves the club after a 2-1 defeat at Botafogo in midweek.
"Santos are beginning a reformulation process after one of the most winning periods in the 101-year history of the club," the statement said, referring to a revamp on and off the pitch.
Five Brazilian top flight teams had already dispensed with their coaches this year during the state championships that preceded the national competition.
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