Tedesco has been let go after a disappointing run of results, including a last-16 exit at last year's European Championship and a poor Nations League showing.
The Italian had won just two of his last 10 matches and fell out with Real Madrid goalkeeper Thibaut Courtois, who said last summer he would not play under Tedesco again.
Now the Royal Belgian Football Association are looking to recruit a replacement, with Arsenal and France great Henry among those tipped to be in contention.
Henry previously worked as Belgium's assistant coach under Roberto Martinez and his most recent coaching role was to take the French men's Olympic team to silver at the 2024 Olympics.
A statement from chief executive Peter Willems read: "Unfortunately, the Red Devils did not perform as we hoped at Euro 2024, just as they did in the next Nations League campaign.
"Domenico made an excellent start as national coach and proved that there are still great things possible, even after the send-off of the previous generation. He has integrated a number of young players into the team, and his successor can build on this."
Tedesco predicted big things for the team he has left behind, adding: "A beautiful journey is now unfortunately coming to an end.
"This team is still at the beginning of its development and will cause a sensation in the coming years. I wish the players, the great employees of the federation and the fans all the best from the bottom of my heart."
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