"Given recent events, the FPF directors decided unanimously to settle (end) Carlos Queiroz's contract with immediate effect," Portuguese Football Federation president Gilberto Madail told a packed news conference.
"This decision has been communicated to Carlos Queiroz, who will receive the reasons for the decision first hand," he added.
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The federation had given the coach, who had two years left on his contract, a one-month ban in late August but Portugal's anti-doping authority later extended that to six months.
"I already sensed it was the inevitable path... We are not satisfied with the fact that Queiroz's rights are not being respected," the coach's lawyer Rui Patricio told reporters.
"If the contract has been terminated without just cause, there has to be compensation. If there has been interference from the government then international organisations, and I mean FIFA of course, will be alerted," he added.
The basis of Queiroz's defence has been that he did not obstruct any anti-doping activity although he has admitted exchanging harsh words with the agents during their surprise visit to Portugal's training camp in May.
The coach said he was simply expressing his annoyance at having his players' rest disturbed and had vowed to appeal the ban at the Court of Arbitration for Sport.
Madail said the FPF will begin searching for a replacement to take charge of the team before next month's Euro 2012 qualifiers at home to Denmark and away to Iceland.
Portugal's struggles in their Euro 2012 qualifiers have occurred with winger Cristiano Ronaldo missing with an ankle injury and the banned Queiroz looking on from the stands.
