Mitsubishi Motors said its board has removed Carlos Ghosn from his role as chairman.
This follows his arrest and sacking from alliance partner Nissan last week for alleged financial misconduct.
Ghosn's firing marks the end of his chairmanship of Japanese automakers, just two years after he was praised for bringing a steadying hand to Mitsubishi Motors following a cheating scandal in 2016.
CEO Osamu Masuko will become temporary chairman, the company said.
The move comes amid discontent over French partner Renault's role in the 19-year alliance of which Ghosn was the driving force.
Sealed in 1999 when Nissan was rescued from near-bankruptcy, it was enlarged in 2016 to include Mitsubishi and enabled the members to jointly develop products and control costs.
The alliance vies with Volkswagen and Toyota for the ranking of the world's biggest automaker.
Despite Nissan recovering and growing rapidly, it remains a junior partner in the shareholding structure.
Renault owns 43% of Nissan and the Japanese automaker holds a 15% non-voting stake in the French firm. And Nissan is almost 60% bigger than Renault by sales.
Top alliance executives are meeting this week in Amsterdam, aiming to shield their joint operations from the fallout of Ghosn's arrest as a power struggle between Nissan and Renault looms.
Renault has refrained from firing him as chairman and CEO.
Nissan CEO Hiroto Saikawa told staff on Monday that power was too concentrated with Ghosn and that in future better communication between alliance board members and executives would help preserve independence and generate synergies among the automakers, a Nissan spokesman said.
Ghosn was pushing for a deeper tie-up, including potentially a full merger between Renault and Nissan at the French government's urging, despite strong reservations at the Japanese firm.
Nissan removed Ghosn at a high stakes board meeting on Thursday after allegations of understating his income and using company money for personal use.
Ghosn has denied the allegations, public broadcaster NHK reported on Sunday.
Nissan holds a controlling 34% stake in Mitsubishi Motors and has two executives on the board.
While the automakers have stressed that operations and business are proceeding as normal, Nissan has postponed the launch of its high-performance Leaf electric car "to ensure that his important product unveiling could receive the coverage it merits", a Nissan spokesman said.
Shares in Mitsubishi Motors closed up 3.3% ahead of the announcement while Nissan climbed 1.8%, outperforming the broader Tokyo's market's 0.8% gain.