An angry Felipao, as he is known in Brazil, left the dugout and walked to the dressing room with four minutes still left in the game.
"I sent myself off," he told reporters after Gremio's third defeat in four matches.
"It's impossible to be more embarrassed than that," said the man at the helm when Brazil lost 7-1 to Germany in the World Cup semi-finals last year.
"There was nothing more I could do so I went to the dressing room. There were three or four minutes left so I wanted to cool down and make sure I didn't do something I shouldn't."
However, pundits rounded on the former Chelsea boss for not sticking by his team.
"Imagine if he did that at the Mineirao (stadium) in the 7-1 against Germany," former Brazil captain Carlos Alberto Torres said on Sportv. "Would he have the guts to do that and walk out on the Brazil team?"
Another ex-Brazil defender, Ricardo Rocha, said that even though Gremio lost some key players in the close season, Felipao should have remained loyal to his team and worked to get them back in the game.
"He knew the problems Gremio were facing, he's spoken about them," Ricardo Rocha said. "And he abandoned ship. He should have stayed with the players till the end."
The defeat leaves Gremio eighth in the Gaucho state championship.
(Reporting by Andrew Downie; Editing by Ken Ferris)
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