Mr Protic leaves Washington after criticising Belgrade
Yugoslavia's Foreign Minister Goran Svilanovic said Mr Protic "can no longer perform the important diplomatic duty after his recent statements and interviews".
Mr Protic had become an outspoken critic of his government since his appointment this year.
Mr Protic is an historian and prominent anti-communist who had a key role in the ousting of former Yugoslav President Slobodan Milosevic last October.
No decision has yet been made on who will replace him.
"It is obvious that I am replaced not because I didn't do my job well but because I openly spoke about things I disagree with," Mr Protic said in Belgrade, where he is on holiday.
"That says a lot about freedom of expression."
Mr Protic said the initiative for his replacement came from President Vojislav Kostunica, whom he accused of "making a full circle - from being a great opponent... to becoming the last defender of communism" in Yugoslavia.
In recent interviews Mr Protic accused the government of inefficiency and a "lack of coordination" with its diplomatic missions.
He caused a stir among those advocating the separation of church and state when he invited the head of the Serbian Orthodox Church, Patriarch Pavle, to perform a religious ceremony in the embassy building in Washington and to give his blessing to the mission.
Milosevic support
After warnings from the government not to act or work independently Mr Protic pledged to "ignore the leftists" and "communist prejudices that we need to be cured from".
Mr Protic alleged on Thursday that "a large number" of officials who worked for former President Milosevic remained in the government even after the major political change last year and that they "continue to obstruct democratic processes."
"Considering all that, it's maybe for the best that I am not in Washington" anymore, he said.