CEO Osamu Masuko will become temporary chairman, the company said.
So far, Renault has refrained from firing Ghosn as chairman and CEO.
Ghosn was arrested Monday after a whistleblower revealed he been under-reporting his income to Japan's securities commission and had been misusing company funds.
The board of Nissan decided unanimously on Thursday to oust Ghosn as chairman, a spectacular fall from grace for the dynamic businessman credited with turning around the firm's once-flagging fortunes by tying its fate to Renault.
Japanese media, citing unidentified sources, have reported that Ghosn and Greg Kelly, an executive who was arrested on suspicion of collaborating with Ghosn, are asserting their innocence.
He is thought to have been planning deeper business ties between the carmakers, something that some Nissan executives feared could see their company reduced to a junior partner.
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Prosecutors said that Ghosn and Kelly conspired to understate Ghosn's compensation over five years starting in fiscal 2010 as being about half of the actual 9.998 billion yen (US$88.9 million).
Ghosn reportedly planned their full-fledged merger although Nissan officials opposed the move due to concerns over Renault's level of control despite the Japanese company becoming the dominant player in the alliance.
To ensure that Nissan would pay the difference to Ghosn, he directed Kelly and other executives to create the annual memos stating the amount of the remuneration and a guarantee that the remaining pay would be given later. Neither man has been charged.
Nissan CEO Hiroto Saikawa told staff on Monday that power was too concentrated with Ghosn and that in future better communication between alliance board members and executives would help preserve independence and generate synergies among the automakers, a Nissan spokesman said.
The Mitsubishi board comprises Ghosn, Masuko, two executives each from Nissan and Mitsubishi group companies, as well as two outside appointees - an academic and a writer. Under Japanese law, a suspect can be held in custody for up to three weeks per suspected charge without any charges being filed.
France's Economy Minister Bruno Le Maire has urged the Japanese firm to share "quickly" whatever evidence it has gathered and stressed that Mr Ghosn will stay at the helm of Renault "until there are tangible charges".
Le Maire added, however, that he did not believe "conspiracy theories" that Ghosn had been the victim of a "palace coup" to prevent him from merging Nissan and Renault.