The 61-year-old was appointed at Olimpiyskiy in September 2012 and led the club to a third-placed finish in his debut season in charge.
However, a 2-0 home defeat to league leaders Shakhtar Donetsk on Wednesday prompted Dynamo's hierarchy to dispense of Blokhin's services.
A statement on the club's official website confirmed president Ihor Surkis had taken the decision to fire Blokhin for "unsatisfactory results demonstrated by the team".
The Shakhtar setback left Dynamo seven points adrift of the leaders and second-placed Dnipro.
Blokhin enjoyed a 19-year spell at Dynamo during his playing career before moving into management.
He counts spells at the likes of Olympiacos and AEK Athens on his resume and also had two spells in charge of the Ukraine national team.
