Pope Francis previously clashed with Cardinal Gerhard Muller over the issue of civilly remarried Catholics receiving Holy Communion.
Cardinal Mueller disagreed with the pontiff's decision, insisting they cannot, given church teaching on the indissolubility of marriage.
Pope Francis could have decided to allow Cardinal Mueller keep his post as he isn't turning 70 until December, which is the normal retirement age for bishops.
Instead, the Vatican the pope had thanked Cardinal Gerhard Mueller for his service and would be adopting the next in line in the Congregation for the Doctrine of the Faith (CDF), Jesuit Monsignor Luis Ferrer, to succeed him.
This is the second time this week the Vatican has come under the spotlight after Pope Francis granted Cardinal George Pell a leave of absence to return to his native Australia to face trial on sexual assault charges.
The Pope's financial advisor and Australia's most senior Catholic has since been charged with multiple counts of historical sexual assault offences.
As Muller and Pell are two of the most powerful cardinals in the Vatican - after the Vatican secretary of state, Cardinal Pietro Parolin - their absences are likely to create a power vacuum for the conservative wing in the Holy See hierarchy.
