The former Real Madrid and Brazil coach, who took charge 10 months ago, steered Flamengo clear of relegation last season but results have been poor since their loss to Vasco da Gama in the Carioca (Rio) state championship semi-finals.
"Vanderlei Luxemburgo is no longer Flamengo’s trainer. He leaves the position after 10 months in charge of the football team," Flamengo said on their website.
"The board thank the coach for services rendered and wish him success in the continuation of his career."
The decision came after Sunday's 2-1 defeat by modest Avai left them with one point from three matches in the Brazilian championship that started this month.
Luxemburgo was approached by Sao Paulo president Carlos Aidar last month but he turned down the offer.
Luxemburgo, who had signed a contract until the end of the year, leaves the club after 34 wins and 14 defeats in 59 matches.
The 63-year-old, who coached Real Madrid in 2004/5, had previous spells in charge of Flamengo in 1991, 1995 and 2010-2012, winning the Carioca title in 2011.
(Reporting by Rex Gowar; Editing by Amlan Chakraborty)
