Former England batsman Bob Woolmer, who coached South Africa, replaces Miandad, the Board said.
"His contract has been terminated," PCB chairman Shaharyar Khan told a press conference on Wednesday.
"We offered him to serve as national cricket advisor but he has declined," the PCB chief said.
"We have convinced Bob Woolmer to take over as coach."
In April India capped their first tour across the border for 15 years with maiden One-day and Test series wins on Pakistani soil.
Pakistan's defeat sparked severe criticism over the team's management while players were accused of lacking discipline.
As a show of how seriously the country takes cricket, a Parliamentary committee last month debated the reason for the defeat. The Senate standing committee heard PCB chairman Khan, chief executive Ramiz Raja and chief selector Wasim Bari.
"Our defeats in the One-day and Test series to India are seen as disastrous by the media and common public so there is a need to address the problems in the country's most popular sport," committee chairman Zafar Iqbal Chaudhry had said last month.
Miandad's tenure, his third as coach, was to have expired in April 2005.
"I feel sorry for Miandad but the India defeat did show up some flaws in the team and lack of morale and we need to invest in the future," said Khan.
Miandad was first hired as coach in August 1998 but left the job after developing differences with Wasim Akram and some other senior players, shortly before the 1999 World Cup.
He was reappointed coach in March 2000 but was sacked after Pakistan's flop tour of New Zealand in April 2001.
His current tenure started in April 2003 after Pakistan failed to progress beyond the World Cup held in South Africa.
The 56-year-old Woolmer played 19 Tests for England in the 1970s before serving as South African coach until the 1999 World Cup. He will join the Pakistan team on July 2 before they embark on their Asia Cup title defence in Sri Lanka from July 16 to August 1.
Woolmer, who is serving as the International Cricket Council's (ICC) high performance manager, had earlier refused Pakistan's coaching offer in 2000.
"It was not easy to have a coach of Woolmer's status who is regarded as a pioneer and highly respected but through negotiations we have asked him to take up the job until the World Cup 2007," Khan said.
"Pakistan needs high-tech coaching and, therefore, there can be no better candidate than Woolmer."
While refusing to disclose Woolmer's salary, Khan said he would get less than Miandad, who was reportedly getting 1.1 million rupees (around 20,000 dollars) a month.
Woolmer will also have a local assistant to avoid any communication problems, said Khan.
Miandad's ouster came just four days after the former master batsman celebrated his 47th birthday.
"I have served the country to the best of my ability but I am sorry that I have been let down everytime," said Miandad, who played 124 Tests and 233 One-dayers for Pakistan.
"It is nothing to do with the defeat against India, but if it is, then I am sorry to say that you can't blame the coach," he added.
PCB also announced Andy Gray of South Africa has been hired as a physical trainer.