Prosinecki sacked as Bosnia boss
Prosinecki, 50, who featured for the Croats when they finished third at the 1998 World Cup, had been in the post since January last year.
Bosnia are among 16 sides to feature in March's play-offs looking for one of the four final spots at the tournament.
The Football Association of Bosnia and Herzegovina (N/FSBiH) said in a statement on its website the members of its executive committee "have accepted the proposal on the consensual termination of the contract with coach Robert Prosinecki".
The decision was made after "analysis and plans" aimed at the "success in the (Euro 2020) play-off", the N/FSBiH added.
Prosinecki had originally stepped down from the job in September after a 4-2 defeat to Armenia in the qualifying group stages.
But the federation gave the 50-year-old another chance before he withdrew his resignation.
Bosnia finished fourth in Group J, behind Italy, Finland and Greece after winning four times in 10 games.
If they beat Northern Ireland in the new year they will face either Slovakia or Republic of Ireland in a one-legged final at home.
Prosinecki worked as an assistant coach with Croatia before being appointed Azerbaijan boss after a glittering playing career which included spells at Real Madrid, Barcelona and Sevilla, and saw him win the European Cup with Red Star Belgrade in 1991.
Bosnia's only appearance at a major tournament came at the 2014 World Cup in Brazil where they finished third in their group behind Nigeria and eventual runners-up Argentina.