Prime Minister Justin Trudeau has fired Canada's ambassador to China, John McCallum.
It follows controversial comments Mr McCallum made about an extradition case involving a senior executive from the Chinese telecoms giant Huawei.
Mr Trudeau said in a statement he had asked John McCallum to step down, but did not offer a reason.
The detention of Meng Wanzhou, at the request of the US, angered China and soured Canada's relations with Beijing.
Ms Meng, Huawei's chief financial officer, is accused by the US of evading sanctions on Iran. Both she and Huawei deny those allegations.
In a statement Mr Trudeau said: "Last night I asked for and accepted John McCallum's resignation as Canada's ambassador to China."
He said the veteran diplomat had served Canadians honourably and with distinction with many positions in cabinet, and thanked him and his family for their service.
Mr McCallum caused controversy on Tuesday when he publicly argued that the US extradition request for Ms Meng was seriously flawed.
The next day he issued a statement saying that he "misspoke" and regretted that his comments had created "confusion".
But on Friday he was quoted as saying it would be "great for Canada" if the US dropped the request.
Ms Meng's case has led to rising diplomatic tensions between Canada and China.
Earlier this month, a Canadian man was sentenced to death in China after a court said a jail term of 15 years was too lenient.
Two other Canadians were arrested following the detention of Ms Meng.
Some China analysts believe that the arrests were a tit-for-tat response to her detention, a claim Chinese officials have denied.
Meanwhile, US prosecutors are expected to file a formal extradition request with Canada soon.
China's foreign ministry has urged US officials to withdraw the arrest order and refrain from moving ahead with the extradition request.
Ms Meng was released on bail by a Canadian court last month.