The 26-year-old was also slapped with a six-month ban from the domestic game and a fine of two million taka ($24,000) over the incident, Bangladesh Cricket Board (BCB) president Nazmul Hassan said.
The national contract for Bangladeshi players was due to go into effect on January 1, 2018.
The decision came after Rahman was found to have assaulted a young fan, believed to be aged 12, who had taunted him during a first-class National Cricket League match in Rahman's home town of Rajshahi on December 21.
He was also under fire for arguing with the match referee when he was called for a hearing.
"We would like to send a strong message to all players on the first day of New Year. No matter how big a player one might be, he must maintain discipline," Hassan told reporters.
"He (Rahman) was called for a hearing earlier and we also received the report from the match referee. He'll no longer be a contracted player," he said.
Rahman, who has played 10 Tests, 46 one-day internationals and 33 Twenty20 internationals since his international debut in 2014, has a history of disciplinary problems.
The board also fined star batsman Tamim Iqbal half-a- million taka ($6,000) after he spoke publicly against the BCB's pitch preparations during the recent edition of the BPL.
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