Usuthu are yet to win a match this season and are sitting on the bottom of the log with two points from five matches.
According to sources, Mngqithi was given two matches against Jomo Cosmos on Tuesday and against Moroka Swallows on Saturday to win, and if failed he would be fired. KickOff.com reported that the club were ready to take action last week.
In those matches the former Golden Arrows coach drew against Cosmos, and then lost to Swallows 1-0 at home on Satuday.
The club director Graham O'Connor said on the club official website that the decision to terminate his contract was purely influenced by lack of positive results.
"Considering the fact that Manqoba has added a lot of value in the club but unfortunately the results were not forthcoming, hence we had to release him from his contract," he says.
O'Connor also reveals that Mngqithi will be replaced by Durban Warriors coach Roger Palmgren who will be assisted by the same technical team.
Palmgren will assume his new role immediately and his first match in charge will be an away tie against Bidvest Wits on 24th September.
"Firstly I feel very sad for the coach because I've been part of AmaZulu, and I was one of the people who recommended him but we needed more points than we have," Palmgren says.
"We're all going to be judged by results as coaches. I promised myself after Thanda [Royal Zulu] to never take a team without proper administration and a good team.
"I still believe that even though we have not been getting the good results – we have a good mixture of young and experienced players," Palmgren says.