Ajax great Blind was appointed as Guus Hiddink's successor midway through the Oranje's ill-fated qualification bid for Euro 2016.
A chastening 2-0 loss to Bulgaria on Saturday left the beaten 2010 World Cup finalists facing the prospect of missing out on a second major tournament in succession.
Blind admitted his decision to select 17-year-old Ajax prospect Matthijs de Ligt for what turned out to be a nightmare debut in defence was an error and afterwards stated he would consider his future.
On Sunday, the 55-year-old's employers made the decision for him.
"We have respect for what Danny did for us and for the team during his tenure," KNVB director Jean Paul Decossaux said in a statement.
"But because the sporting results are unfortunately disappointing, and because qualifying for the World Cup in Russia is now in difficulty, we unfortunately feel forced to relieve him."