A Securities and Exchange Commission (SEC) filing states he will leave the company today and an internal memo obtained by technology website Re/code reveals he was fired by chief executive Marissa Mayer.
In the memo, Mayer states that "during my reflection, I made the difficult decision that our COO, Henrique de Castro, should leave the company".
The SEC filing reveals he will receive severance benefits outlined when he joined the company in November 2012, a severance agreement and equity award agreements.
Another SEC filing reveals the severance package includes a $20 million (£12 million) restricted stock bonus, which comes on top of the $39.2 million (£20 million) he earned in 2012.
Mayer lured Castro to Yahoo from his job at Google, where he held a vice-president job title and managed media, mobile and platforms globally.
However, Yahoo lost its spot as the number-two digital ad seller in the US to Facebook for the first time in 2013, according to figures from eMarketer.
The research company claims Yahoo's share of US digital ad revenues continue to decline, reaching 5.8% in 2013, from a 6.8% share in 2012.
By comparison, Facebook’s share grew to 7.4% in 2013 from 5.9% in 2012.