Mugabe accused Emmerson Mnangagwa of "disloyalty, disrespect, deceitfulness and unreliability," according to a press statement issued by Zimbabwe's Information Minister Simon Khaya-Moyo.
Mnangagwa's removal means Grace Mugabe is expected to be appointed vice president at a special congress of the ruling Zanu-PF party next month.
"The First Lady is well-positioned to fill the (role) of Vice President and has significant support from the Zanu-PF party machinery," says Tinashe Jakwa, a Southern Africa analyst at the African Studies Association of Australasia and the Pacific (AFSAAP).
However, the party's constitution does not currently allow for a female to take the vice presidency, so this would first need to be amended, although provincial councils have expressed their willingness to make these changes.
In August, Grace Mugabe was accused of assaulting a model, Gabriella Engels, with an electric cord in South Africa, but was allowed to return home to Zimbabwe
after the South African government approved her request for diplomatic immunity.
Mugabe has potential competition for the vice presidency.
Minister for Defense Sydney Sekeramayi is "believed to be a contender for the vice presidency and is considered a dark horse in the succession drama," Jakwa says.
"His elevation to the VP post would be a strategic move to curb perceptions of a Mugabe dynasty."
Robert Mugabe has long been criticized for corruption and abuse of power. In 2000, he ordered white farmers to give up their land, and two years after that the EU and the US imposed targeted sanctions on Mugabe and some senior ZANU-PF party members after widespread reports of human rights violations.
That year he was re-elected to another six-year presidential term amid charges of fraud and state-sponsored-terrorism.
The years that followed the land grabs saw Zimbabweans endure the country's worst famine in 60 years, while the rights organization Human Rights Watch accused Mugabe's Zanu-PF party of using starvation as a tool for the regime's support among Zimbabweans.
The World Health Organization came under fire last month
after selecting the nonagenarian leader -- who has ruled Zimbabwe since 1980 with little opposition -- as a goodwill ambassador.
Public disapproval, however, prompted WHO's director-general, Tedros Adhanom Ghebreyesus, to say on Twitter that he was "rethinking" the decision.