The French fashion house said on Tuesday that Galliano has been immediately laid off and the process of firing him has begun.
Last week, Dior suspended Galliano as its creative director following several accusations of racist and anti-Semitic rants against customers of at least one Paris café. On Monday, a video posted online showed Galliano drunkenly telling a café patron, "I love Hitler."
The firing comes just before the latest Paris ready-to-wear shows begin.
Dior had came under even more pressure after Oscar-winning actress Natalie Portman, one of the company's spokesmodels, said in a statement she "will not be associated with Mr. Galliano in any way."
Dior is scheduled to present its fall-winter 2011-2012 ready-to-wear show on Friday. Galliano was also scheduled to present his own signature line on Sunday.