Dinamo were beaten 4-0 by bottom side Anzhi on Sunday, with goals from Alexander Burharov, Fyodor Smolov, Serder Serderov and Makhach Gadzhiev seeing Petrescu's charges slip to fourth in the table.
Following the defeat, Dinamo's supervisory board produced a proposal to change their coach and Petrescu's departure was duly confirmed on Tuesday.
Sporting director Guram Ajo told the club's official website: "After the match with Anzhi, Dynamo's supervisory board came out with a proposal to change the coach.
"Today at a meeting with Dan Petrescu's team, we have announced the termination of the contract with the head coach by mutual consent of the parties. We thanked Petrescu for work and wished him good luck in his future career.
"Last year Dan plucked the club out of a difficult situation, but lately no progress has been seen."
The club also confirmed via their website that negotiations are taking place with Amkar Perm coach Stanislav Cherchesov over the vacant coaching role.
"I hope we can present him as the new head coach soon," Ajo added.
Former Romania international Petrescu had been at the club since 2012 - joining from Kuban Krasnodar.
