In a statement, Nissan said it would remove Ghosn and another director, Greg Kelly, after an internal investigation revealed the alleged fraud.
Based on a whistle-blower tip, Nissan has been doing an internal investigation over the past several months into suspected financial misconduct involving Ghosn and director Greg Kelly, the company said.
Japanese media reports say Ghosn under-reported his compensation over five years by approximately $44 million.
Nissan announced on November 19 that its months-long investigation based on whistleblower tips has revealed that Ghosn, 64, and Kelly, 62, have committed a number of wrongdoings. Ghosn's slow retreat from his roles at each company-including stepping down as Nissan's CEO past year and suggesting he may step down from his post as CEO of Renault before the scheduled end of his term in 2022-have sparked rumors that he wasn't on board with plans for further integration and might be thinking of leaving the alliance anyway.
He said the company had uncovered years of financial misconduct including under-reporting of income and inappropriate personal use of company assets.
"The initial share price reaction shows how pivotal he is", Citi analyst Raghav Gupta-Chaudhary said on Monday.
Born in Brazil, Ghosn joined Renault in 1996 before he assumed the title of chief operating officer for Nissan in 1999.
He was also a controversial figure in Japan as one of the only non-Japanese heads of a large Japanese company.
"Nissan deeply apologizes for causing great concern to our shareholders and stakeholders".
"I'm anxious about the company's future", he said.
"We need to really look back at what happened, take it seriously and take fundamental countermeasures", he said.
Nissan confirmed the subject of the investigation Monday and said it was cooperating with prosecutors.
Ousting the 64-year-old executive from Nissan is bound to raise questions about the future of a three-way auto alliance between Nissan, Renault and Mitsubishi, which Ghosn had personally shaped and pledged to consolidate with a deeper tie-up.
In March, sources close to the matter told Reuters the alliance partners were discussing plans for a closer tie-up in which Nissan would acquire the bulk of the French state's 15 percent stake in Renault.
He became Renault's CEO in 2005, pressing for further streamlining through joint procurement and development under the Nissan-Renault alliance.
Ghosn was at Nissan for 19 years and signed a contract this year that would have run through 2022.
He had also in recent months made his mark on British politics, making outspoken comments on the effects of a hard Brexit on Nissan's famous Sunderland factory.
After Mitsubishi Motors' sales plummeted in the wake of fuel data manipulation scandal, Nissan took control of the smaller Japanese automaker in 2016 by purchasing a big equity stake.
He is credited with saving Nissan from bankruptcy through measures including closing plants and restructuring, and he has instant name recognition in Japan, where he is a rare high-profile foreign executive.