Petke was sent off following RSL's defeat to Tigres last month as he confronted the officials.
The coach was suspended for three MLS matches, three Leagues Cup matches and fined $25,000 for using "unacceptable and offensive language" and for his "repeated confrontational misconduct towards match officials".
Petke was also required to attend anger management, sensitivity and diversity training.
In addition, RSL suspended its coach without pay for two weeks.
He had been set to return on Monday before the club announced his departure.
A statement described "the steepest sanctions ever imposed on an MLS coach" and added: "After further deliberations and a series of constructive discussions internally and with various members of our community, we have concluded, pursuant to his employment agreement, to immediately terminate Mike Petke's employment."
The club explained: "At Real Salt Lake, we have the privilege to represent our great community and fans here locally and on a national and global basis.
"We hold all of our coaches, players, executives and staff to the highest standards of professionalism.
"As an organisation, it is vital that everyone, particularly our leadership, reflects and embodies our core values and the values of our community, treating all people with respect, civility and professionalism.
"Moreover, throughout our 15-year history, we have championed diversity, acceptance and inclusion throughout our organisation, our stadiums and our community. This is a responsibility that we take very seriously."
RSL have replaced Petke with assistant Freddy Juarez on an interim basis until the end of the season, having collected seven points from three games in the coach's absence.
Petke, who won the 2013 Supporters' Shield with New York Red Bulls, has been infamously outspoken in the past.
Last year, he challenged MLS to "drain my bank account, I don't give a s*** any more" in an incredible rant as he criticised officials following a loss to Minnesota United. He was banned for two matches and fined $10,000.