The victim was identified as Electronics Technician 3rd Class Kenneth Aaron Smith, 22, who is from New Jersey.
The vice admiral's removal comes in the aftermath of the USS John McCain's collision with an oil tanker on Monday that left ten sailors missing and at least one dead. The Navy said the warship suffered "significant damage" to its hull, flooding crew berths, machinery and communications rooms.
The Navy says other missing soldiers were from Missouri, Maryland, Ohio, New York, Connecticut and IL.
"Search and rescue efforts continue in coordination with local authorities", it said in the post.
He pointed out that was the fourth such incident this year, however. The incident resulted in the deaths of seven U.S. sailors.
His dismissal was the result of a "loss of confidence in his ability to command", the US Navy said in a terse two-line statement.
US Navy 7th Fleet said Tuesday morning that the search for 10 sailors assigned to the ship was ongoing.
Earlier on Thursday, the US Navy reported that five injured sailors of the warship have been discharged from hospital to return to the command.
The warship had been heading to Singapore on a routine port visit after manouevres in the South China Sea.
The US navy has ordered a broad investigation into its performance and readiness of its fleet.