Branca's position had come under threat after fans reportedly blamed him for the controversial collapsed swap deal to send Fredy Guarin to Juventus and bring Mirko Vucinic to San Siro.
And Branca, the former striker who played for Inter between 1996 and 1998, has now been relieved of his role, with sporting director Piero Ausilio assuming his duties.
A statement on the Inter website read: "FC Internazionale wishes to announce that the club and Mr Marco Branca have reached an agreement to end their working relationship.
"FC Internazionale hands the reins of the club's technical area to sporting director Piero Ausilio, who will report directly to managing director Marco Fassone.
"The club thanks Marco Branca for the valuable contribution he has made, first as a player and then as a director, and wishes him the best of luck with the next stage of his career.
"Mr Marco Branca also thanks the club for the opportunities it has offered him and for the prestigious results achieved together. He wishes Inter a highly successful future."
