The move threatens to destabilize one of the most highly-rated teams in the tournament, with La Roja set to play Portugal on Friday.
Julen Lopetegui has been sacked as manager of Spain, after taking the Real Madrid job on Tuesday.
Lopetegui was announced as Zinedine Zidane's successor in a move that surprised many just days before the World Cup in Russia is due to start.
The announcement initially claimed that the 51-year-old would take the reins at Santiago Bernabeu after the conclusion of the tournament, but La Roja have acted now after calling a hastily-arranged press conference on Wednesday.
"We have decided to fire the national coach," Spanish Football Federation president, Luis Rubiales, said. "What we have achieved in getting here is due in great part to him, and we must thank him and wish him luck."
Rubiales insists he does not feel undermined, but has suggested that Real acted in a manner unbecoming of their status.
He added: “I don’t feel betrayed. Lopetegui has done impeccable work. How all this has been done is something else.
"I have spoken with the players and I can guarantee they will do everything, along with the new coach, to take the team as far as possible.
"Real Madrid look for the best coach, that is fine by me. I have no opinion about how Real Madrid act. But the federation have an obligation to represent all Spaniards.
"To win is very important, to have the best coach is very important, but above everything is acting in the right way. Maybe this is tough now, but in the end it will make us stronger.”
Lopetegui was unbeaten in his time in the Spain dugout, guiding his team to 14 wins and six draws from 20 matches, and he signed a new two-year contract to take him through to Euro 2020 in May.
The stunning development threatens to destabilise a team regarded as one of the favourites to win the tournament in Russia.
Spain face Portugal on Friday, and will also face Iran and Morocco in Group B.
Rubiales has not revealed who will be in charge for La Roja's opening game of the tournament, but insists that an announcement will be made in due course.
“We are going to touch as little as possible," he said. "We are working on it. When we know we will tell you.”
It has been reported that several Spain players were keen for Lopetegui to stay on throughout the tournament, but that Rubiales was keen to act after finding out of the manager's agreement with Real Madrid mere minutes before the announcement was made.