The decision comes just days after Brazil secured the Superclassic of the Americas series against rivals Argentina following a dramatic penalty shootout in Buenos Aires.
Brazil's 2002 World Cup-winning coach Luiz Felipe Scolari has been widely tipped as Menezes' replacement.
Menezes had been the subject of constant speculation since Brazil's 1–2 Olympic final loss to Mexico at the London Games.
The result was seen as a failure in Brazil due to the fact the Olympics are the only major international tournament the country is yet to win.
Menezes, 50, took charge of Brazil after the team's quarter-final exit at the 2010 World Cup in South Africa. He coached the national side 33 times, posting 21 victories, six losses and six draws.
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