"FA President Ahmed Eid will be responsible for negotiating and finalising a deal with a new coach within a week."
Ex-Real Madrid coach Lopez Caro, who was appointed last year after the sacking of Frank Rijkaard, was under pressure for failing to guide the team to victory in the Gulf Cup in Riyadh last month.
Saudi Arabia lost 2-1 in the final to Qatar at their home King Fahd stadium.
Saudi Arabia are drawn in Group B with Uzbekistan, North Korea and China at the Jan. 9 - 31 Asian Cup.
(Editing by Ian Ransom)
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