Vipin Srivastava, the senior most professor, will perform the duties of the vice chancellor, the university announced on Sunday.
Rao was under fire for his handling of the issue relating to the suspension of five Dalit students, one of whom, Rohith Vemula, committed suicide on January 17.
Demanding the vice chancellor's resignation, students continued their protest on the campus.
Meanwhile, the university registrar also issued orders on Sunday with regard to revocation of suspension of four students. The executive council on Thursday had decided to revoke the suspension.
The students, however, continued their protest demanding the vice chancellor's ouster.