The announcement was made by the Brazilian Football Federation (CBF). The decision was widely expected after the 2-1 loss to the Dutch. Brazil led 1-0 on Robinho"s first-half goal, but allowed two goals and had a player sent off in a dismal second-half performance in Port Elizabeth, South Africa.
“With the closing of the work cycle that started in August 2006 and ended with the elimination of Brazil from the World Cup in South Africa, the CBF announces the dismissal of the Technical Commission of the Brazilian team," the federation said in a statement, according to AP reports.
A new coach will be appointed before the end of the month, CBF said.
Luiz Felipe Scolari, who won the title for Brazil in 2002 has been tipped to take charge of the National team but he has signed a two-year deal with Brazilian club Palmeiras.
Dunga, 46, who skippered Brazil to the 1994 World Cup, had been national team coach since 2006.