He will be replaced by Dieter Zetsche, head of the firm's Chrysler division.
Schrempp has been under pressure as earnings have suffered and the Mercedes brand was tarnished by build and reliability problems.
Investors have also questioned his plan to expand globally at a time of fierce competition and waning consumer demand.
The personnel changes overshadowed DaimlerChrysler's earnings report today, which bettered analysts' forecasts.
Operating profit in the second quarter fell by 20% to €1.67bn (£1.18bn).
Net profit jumped by 28% to €737m (£508.4m), and sales rose a touch to 38.4bn.
Helping to lift earnings was a surprise €12m (£8.3m) operating profit at Mercedes and a 4% increase in operating profit at Chrysler.