Spanish Football Association president, Luis Rubiales, revealed the decision soon after Lopetegui was announced as new coach of Champions League winners Real Madrid.
Despite a clear desire from the players to keep Lopetegui, Hierro insisted he had the full backing of the team and is confident they will give their all to do the nation proud in Russian Federation.
Even before a ball's rolled at Russian Federation 2018, Spain were handed the most sensational news of the week when multiple Champions League victor, Real Madrid, chose to put club before country by announcing La Roja manager Julen Lopetegui as the replacement for Zinedine Zidane from next season. But the federation can not be left outside the negotiation of one of its employees, and find out just five minutes before a public announcement. We have encountered a difficulty that we are going to overcome, I am sure of it'.
"We wish him the greatest of luck", the federation's president, Luis Rubiales, told reporters at the team's World Cup training headquarters, per the Guardian.
"The RFEF can not stay on the margin of the contractual situation of one of its workers", he said. "We feel obliged to make this decision".
Spain are giving serious thought to sacking their head coach Julen Lopeteguiless than 24 hours until the start of the World Cup. "There's a lot to do".
But Hierro, a former Madrid and Spain captain, avoided getting into the rights and wrongs of how he has ended up in the job in such dramatic fashion and told his presentation news conference that he was only interested in looking forward and maintaining the good work which had been done to this point. He has done well through the levels with Spain, he is doing well now, and even though they have stuttered in some of the World Cup warm-up games, the football being played by Spain has been fantastic.
Record: The discontent in the Spanish camp after Lopetegui was announced as the new manager of Real Madrid leaves him without a World Cup.
Hierro has been working as Spain's sporting director since last November.
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"I understand that Real Madrid want to have the best of coaches but the national team belongs to all of Spain and this is not the way to do things", added Rubiales.
He will not be able to complete what he started in Russian Federation but his good work may not go to waste if Hierro can get Spain quickly back on track.
Lopetegui's name had not been mentioned by Spanish media among the probable candidates for the Madrid job, which opened up after Zidane unexpectedly quit. Lopetegui had on May 22 renewed his contract as Spain coach until 2020. He seems a top trainer and that makes it harder to make the decision.
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He has already denied he left in order to take over as France boss from Didier Deschamps following the World Cup.
Either or both could now take charge of Friday evening's game in Sochi against Portugal.
The Spanish team is known as "La Roja" because of its distinctive red shirts. Our objective is to fight for a World Cup, we have been two years preparing for this.
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