The Dutch Former World Player of the Year, who signed on at the Chechen team at the start of the year, was told on the Russian Premier League club's website that he would be fired if they did not win on Tuesday at Amkar Perm.
After the loss due to an own goal in the dying seconds of the match, Chechen leader Ramzan Kadyrov, who is also the president of Terek, said: "Gullit will no longer train Terek.
"He was unable to prove himself as a trainer. Under his command over this season, the team managed only poor results in every game," Kadyrov told the Interfax news agency.
"We hoped Gullit would look after the players, that he would bring an improvement. But our hopes were dashed and we are obliged to do without Gullit's services," Kadyrov said, adding the Dutchman refused to accept any blame for poor performances.
Instead of rolling up his sleeves and working to improve the team's league position, Gullit, 48, was "thinking about bars and discotheques," the club had said ahead of the match.
"Considering all this Ramzan Kadyrov is presenting Ruud Gullit with the task of bringing back three points from Perm.
"In the event of the opposite outcome Gullit will be dismissed from the position of head coach."
When the Dutchman signed an 18-month contract, Kadyrov said his task was to help the club qualify for European competition at the end of the 2011/12 season.
Terek finished 12th last year.
Gullit, named World Soccer's Player of the Year in 1987 and 1989, is one of the most successful Dutch footballers of all time.
He captained a scintillating Netherlands side to the 1988 European Championship title and at club level the forward helped AC Milan win the Champions League in 1989 and 1990.
Gullit has also coached English Premier League sides Chelsea and Newcastle United along with Dutch giants Feyenoord and Major League Soccer club Los Angeles Galaxy.
