The country's football federation announced the decision in the wake of the 1-1 home draw with Cameroon on Sunday, which marked a disappointing start to their Group B campaign.
The Serbian had only been in charge for two matches but was criticised by several players for his tactics in the game in Blida, where Algeria had hoped to make a winning start to a difficult group, the Algerian Press Service news agency added.
He met with the federation president Mohamed Raouraoua on Tuesday to discuss the fallout from the match, after which his departure was announced.
Algeria, who next face Nigeria in November, will now be looking for their third coach within a year. Frenchman Christian Gourcuff quit the job in April to return to Ligue 1.
Rajevac, 62, was previously coach of Ghana, when they became only the third African country to reach the World Cup quarter-finals at the 2010 tournament in South Africa, and Qatar.
(Reporting by Mark Gleeson in Cape Town; Editing by John O'Brien)
