The 51-year-old, who agreed a two-year contract with Al Wasl in May 2011, was dismissed following a meeting of the club's board on Tuesday.
"Following a meeting held by the board of directors of Al Wasl Football Company 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," a club statement said.
Speculation had been rife that Maradona's days as coach were numbered following the resignation of the club's board in June and its replacement with a new one.
"Maradona is the head coach of the Al Wasl team and he will continue for the next season. He will have complete authority over the programme for the next season. There is no change in his position."
Under Maradona, Al Wasl were knocked out of the UAE league cup at the semi-final stage by Al Ahli, the eventual winners, and failed to progress past the second round of the President's Cup.
Maradona's sacking continued his modest record as a coach, in complete contrast to his playing career.
Maradona's judgment at Al Wasl had been questioned through his decision to select goalkeeper Majid Naser for matches in the Gulf Champions League despite the player being in the middle of a 17-match domestic ban for slapping Al Ahli coach Quique Sanchez Flores after a match between the two sides.
Majid's inclusion in the side that faced Al Muharraq proved disastrous as he was sent off for head-butting an opponent and Al Wasl went on the lose the tie despite holding a 3-1 lead after the first leg in Bahrain.
A club spokesman could not confirm Maradona's whereabouts and whether or not he had been contacted with the news of his sacking.
"There is nothing to be added at the moment," he said.
