The board said in a release that the termination, which "grew out of an ongoing investigation into alleged misconduct," would take effect in 30 days.
"We take no joy in this, but the Board felt it was the right thing to do," said Allan Mayer, who will co-chair the Board of Directors in Charney's place. "Dov Charney created American Apparel, but the Company has grown much larger than any one individual and we are confident that its greatest days are still ahead."
Charney, a 45-year-old Montreal-native, has long championed the "made in America" movement and safe factory conditions, especially for garment workers.
He has also faced several sexual harassment allegations in recent years. Several women have accused him of making inappropriate advances towards them at work, while others have claimed that he sexually assaulted them. Charney has denied all the allegations.