The country's governing body have relieved the 46-year-old of his position in charge of La Roja after his side were knocked out of London 2012 without scoring a single goalLuis Milla has been relieved of his post as Spain Under-21 coach after his side's poor showing at this summer's Olympic Games.
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The former Spain international had led his nation to victory at the 2011 European Under-21 Championships, but a little over 12 months later it was a different story as La Roja were eliminated without scoring a single goal in a group that also included Morocco, Honduras and Japan.
In an official statement issued on Tuesday, the Spanish Football Federation (RFEF) moved swiftly to remove Milla from his position and confirmed the contract of his assistant, Juan Carlos Martinez Castrejo, would also not be renewed.
His replacement will take charge of the U21s for their upcoming fixtures againstt Switzerland on September 6 and Croatia on September 10.
Lopetegui led his side to back-to-back victories at the Under-19 European Championship in 2011 and 2012 and the quarter-finals of the 2011 Under-20 World Cup.