The result left Montenegro second in the group on 11 points from six games, six behind England who have played a game more and need a draw when they visit the Montenegrins on October 7 to seal a berth in next year's finals.
Third-placed Switzerland are three points adrift of Montenegro and play them at home in a potentially decisive final group match on October 11.
"The Montenegrin Football Association (FSCG) executive board has made a unanimous decision to relieve Kranjcar of his duties," the body's secretary general Momir Djurdjevac told a news conference.
"We were in a good position to win a play-off berth or even qualify automatically for the Euro 2012 finals and Kranjcar bears most of the blame for the team's slip-ups which have dealt a blow to our chances.
"I know many people will wonder whether sacking Kranjcar was the right thing to do because he made a great start but it was the only possible decision," said Djurdjevac.
FSCG President Dejan Savicevic added: "I feel sorry for Kranjcar and it wasn't easy for me to support his dismissal because I appointed him, but his commitment had deteriorated rapidly since February."
Brnovic, who made six appearances for Yugoslavia and 21 for Serbia and Montenegro, faces a difficult task to keep alive Montenegro's hopes of qualifying for Euro 2012.
