The legendary Argentinian’s position had been in doubt since June when the club’s entire board resigned following a trophyless season.
Maradona, 51, joined the Dubai-based club in May 2011 and still had a year to run on his contract.
He leaves after a disappointing league campaign which saw Al Wasl finish eighth in the table.
“Following a meeting held by the board of directors of Al Wasl football company held to evaluate the technical staff of Al Wasl under the leadership of coach Diego Maradona, it was decided to terminate the services of coach Diego Maradona and his technical staff,” read a statement from the club.
Maradona, a World Cup winner with Argentina in 1986, made headlines in March this year when he confronted opposition fans.
During Al Wasl’s 2-0 UAE Pro League defeat at Al Shabab, he is understood to have climbed up into the stands to protect his wife after fans allegedly started abusing players’ wives and girlfriends.
Maradona had been brought in to help boost Al Wasl’s profile, both on and off the pitch, yet they finished 29 points behind champions Al Ain.