Ramalho, who was hospitalized in January with diverticulitis - a digestive disease, met with Sao Paulo president Carlos Miguel Aidar and vice president of football Ataide Gil Guerreiro after expressing concerns about whether he could lead the team.
Last year, Ramalho spent time in hospital with tachycardia - a faster than normal heart rate.
While Guerreiro claimed Sao Paulo were happy with the job Ramalho was doing, he told the club's website they had to let the 59-year-old go.
"Aidar and I had a long meeting with Muricy," Guerreiro said.
"I wanted the whole way for him to continue with us. He was doing a good job, it was good for us, but we could see he was debilitated."
Interim technical coordinator Milton Cruz will coach Sao Paulo for "three, four games" until the club can find a replacement for Ramalho, according to Guerreiro.
"He [Ramalho] leaves now, we agree [he is] to leave, because the doors open are always here," Guerreiro said.
"He did excellent work."
