Diniz, who was appointed on an interim basis, had a one-year contract but led Brazil for six games in the 2026 World Cup qualifying round, with three defeats, one draw and two wins. He combined his work with Fluminense, the club with which he won the Copa Libertadores last year.
"Diniz's departure is due to the national team's results, which were not as expected," said one of the sources. Brazil are sixth in the South American World Cup qualifying standings.
"Ednaldo approached the president of Fluminense (Mario Bittencourt) to thank him for letting Diniz go at a time when the national team needed him.
"He then called Diniz himself to tell him that he was looking for a new coach and that he would no longer be in the plans after finding his replacement," added a second source.
The coach's departure from the national team is part of the strategy of the president of the Brazilian Football Confederation (CBF), Ednaldo Rodrigues, to change the team's strategy for 2024.
The CBF was looking to Carlo Ancelotti to take over this year, but the Italian preferred to renew his contract with Real Madrid.
Now, Rodrigues' favourite to lead the team is Dorival, according to the sources, who spoke on condition of anonymity.
"Ednaldo has already opened talks with the president of Sao Paulo, Julio Casares, to express his interest in Dorival Jr," said the second source.
"He explained that he was in a hurry and wanted Dorival soon because of the start of the season. Julio said he was going to talk to Dorival and that the situation would be resolved by Monday."
