The Selecao boss failed to deliver both the Copa America and Olympic trophies, and has left his post just 19 months before the 2014 World Cup
The 50-year-old took charge of his nation in 2010 after a disappointing World Cup campaign under previous coach Dunga, and led the Selecao at both the 2011 Copa America and the 2012 Olympics.
However, his side crashed out of the Argentina-hosted tournament to Paraguay on penalties, before stumbling to a 2-1 loss to Mexico in London in the summer.
Menezes released a brief statement on his official Twitter account shortly after being relieved of his duties on Friday.
"I am no longer the coach of Brazil. I thank all those that worked with me on this special project, all the players, and to all the people that believe in our work. I wish success to Selecao ahead of our biggest dream, the 2014 World Cup."
Corinthians coach Tite, Santos boss Muricy Ramalho and Luiz Felipe Scolari, who masterminded Brazil's 2002 World Cup victory, have been installed as the early favourites to succeed Menezes and continue the Selecao's preparations ahead of World Cup 2014.