Boiko Borisov said on Monday that Dyankov, who was also his deputy, will be replaced by current EU Funds Minister Tomislav Donchev, who will keep both portfolios.
Borisov did not elaborate on the motives for the reshuffle. He is to propose the changes for approval in Parliament later this week.
On Sunday, thousands of protesters across the country accused the government of failing to improve their falling living standards.
Dyankov's dismissal comes as the center-right government is losing public support in the wake of the country's worst economic downturn in a decade and ahead of general elections in July.