Petkovic has been at the centre of intense speculation over his future for a number of weeks and agreed last month to take charge of Switzerland's national team following this summer's World Cup.
The Bosnian had previously vowed he would continue to lead Lazio until the end of the season, but a statement on the club's website said his contract has now been terminated following " the conclusion of disciplinary proceedings".
Lazio president Claudio Lotito had voiced his displeasure at Petkovic agreeing to take the Swiss job while still in his current position.
His replacement Reja enjoyed two successful seasons as Biancoceleste boss before resigning in 2012, with Petkovic taking over, and was reportedly put in charge of training sessions this week as Lazio prepare for Monday's visit of Inter Milan.
The Rome club lie 10th in the Serie A standings, just six points above the relegation zone and with one win from their last eight matches.