The team's technical director Mich D'Avray will take over head coaching duties of the Premiership side, with Fadlu Davids maintaining his role as assistant coach, pending the results of an internal hearing.
"Chippa United FC has suspended incumbent coach Ernst Middendorp with immediate effect pending the outcome of an investigation and possible hearing to follow," read the official statement released by the club.
"Our technical director Mich D'Avray will be the caretaker coach until such time as the matter is finalised and our assistant coach Mr. Fadlu Davids continues in his current role."
Middendorp has only been in charge of the relegation-threatened club since December after he replaced Roger Sikhakhane, but was unable to engineer a single win in that time.
The Port Elizabeth-based club are 12th in the Premiership but are only three points above the relegation places and could get dragged into the drop zone if their performance does not improve soon.
Under the German's tutelage the Chilli Boys lost four games and drew four in all competitions.