Mosimane is the first victim of Africa's qualifying campaign for the 2014 finals in Brazil after his side were held to a 1-1 draw at home by Ethiopia, 71 places below them in the FIFA rankings, in their opening Group A qualifier on Sunday.
The announcement by South Africa's football governing body in a statement on Tuesday came after a meeting with officials that went on late into Monday night.
Mosimane had stated before the Ethiopia match that it was a "must win" affair for his team.
The 47-year-old coach had been a beleaguered figure since his horror error last year when he botched the calculations for his side to qualify for the 2012 African Nations Cup finals.
South Africa were comfortably placed going into their last group game at home but played for a draw and what they presumed was top place by virtue of goal difference.
But the rules stated that in the case of a tie in the standings, the tie breaker would be head to head result and so South Africa lost out to Niger in an embarrassing mistake.
Mosimane ignored calls to leave then and was given a surprise stay of execution by the soccer association but a run of seven matches without a win brought his tenure to a close on Tuesday.
Mosimane, who had two spells as national coach, departs with a record of nine wins, 10 draws and four losses in 23 matches.
He will be replaced by assistant Steve Komphela for Saturday's second qualifier away at neighbours Botswana.
South Africa, celebrating 20 years back in the international football fold next month, have employed 15 coaches in that time despite winning one Nations Cup title and participating at three World Cup finals.