The former Manchester United boss, who took over in July 2008, also paid a heavy price for a loss of form that saw his team struggle to reach the World Cup and pick up just a point from their opening two Euro 2012 qualifiers.
"The Portuguese Football Federation (FPF) has decided unanimously to end the contract of national coach Carlos Queiroz," FPF president Gilberto Madail told a news conference.
Queiroz was serving a six-month ban, which he had described as "erroneous and abusive", for hindering dope testers who had turned up to test his players at a pre-World Cup training camp in May.
Portugal were knocked out by Spain in the last 16 of the World Cup.
Their campaign to reach the Euro 2012 finals has suffered a nightmare start with a 4-4 home draw against lowly Cyprus followed by a 1-0 defeat against Norway on Tuesday.
