Brazil fired Dunga as coach on Tuesday, the national soccer confederation (CBF) said, two days after his side failed to get past the group stages of the Centenary Copa America.
The Brazilians drew 0-0 with Ecuador and beat Haiti 7-1 but were beaten 1-0 by Peru to exit the competition at the group stages for the first time since 1987.
Dunga, who was in his second spell as Brazil coach, was fired after a meeting at the CBF in Rio de Janeiro.
"The Brazilian Football Confederation decided this Tuesday to dissolve the technical commission of the Brazilian national team," the CBF said in a short statement.
"National teams coordinator Gilmar Rinaldi, coach Dunga and their entire team will leave their posts.
"The CBF has began the process of choosing a new technical commission for the Brazilian team."
The overwhelming favorite to become Brazil's new coach is Corinthians 55-year-old manager Tite.
The new man will also be charged with leading the Under-23 squad in August's Olympic Games in Rio de Janeiro, the only major tournament Brazil has never won.