Mehmood Ali Durrani was officially accused of showing "irresponsible behaviour" and a "lack of coordination" on security matters.
A BBC correspondent says the main accusation appears to be that he failed to share information with politicians.
Islamabad has confirmed the only gunman to survive Mumbai is a Pakistani.
More than 170 people died when 10 gunmen attacked Mumbai on 26 November.
The BBC's Charles Haviland in Islamabad notes that Mr Durrani, a retired general, was sacked just hours after the official confirmation that gunman Ajmal Kasab was a Pakistani citizen.