The move has prompted the chairman and chief fundraiser of Ukip in Scotland to quit in protest. The party's administrative body has also been dissolved.
Monckton told the Sunday Herald: "There isn't any Ukip in Scotland. It's been wiped out."
This newspaper recently revealed the internal divisions ripping apart the anti-Europe party in Scotland.
Key figures, including Monckton and chairman Mike Scott-Hayward, believed a trio of senior party members, including former by-election candidate Otto Inglis, were plotting a takeover.
The grievances came to a head when six of Ukip Scotland's nine shortlisted candidates for the European parliament elections, including Monckton, resigned.
They did so in protest at Inglis's alleged tactics during the selection contest, which was eventually won by Farage ally David Coburn, who is Ukip's London chairman.
Relations are now at an all-time low and last Monday, Farage fired Monckton by email.
The party leader wrote: "After much thought and many weeks of dialogue between yourself, your committee and the officers of the party I have decided, with the support of the NEC, to remove from you the position of leader of Ukip Scotland."
Farage said a "new team" was required to support Coburn, adding: "This requires a clear management structure, so we are now focusing around a lead candidate rather than a leader in Scotland, and reconstituting the Ukip Scotland committee to make sure that it is in the best shape to support the campaign to elect the first Ukip MEP for Scotland."
Speaking to the Sunday Herald, Monckton said Ukip had been "slow" to deal with "a very tiresome faction" that was destabilising the party in Scotland, saying: "They prevented Ukip from functioning for nearly a year."
On Farage sacking him, Monckton said: "I'm not happy he didn't telephone me before he sacked me. I thought Nigel would have had the common sense to ring me."
He added: "In Ukip, there is an absence of professionalism."
Monckton said the recent changes left the party without any structure or purpose, adding: "There isn't any Ukip in Scotland. It's gone. It's been wiped out."
And he said: "London now realises it has made the most ghastly mistake."
A senior source said: "This sacking is an example of Farage's control freakery."
Ukip's national executive has also wound up the party's ruling "Scottish committee" and an extraordinary general meeting scheduled for today has been scrapped. In an email to members, national Ukip chairman Steve Crowther said: "There has been some difficulty within the Ukip Scotland committee for some time, and the NEC has decided that the best way forward, instead of an EGM to discuss a series of no-confidence motions in the officers, would be to dissolve the current committee and take stock."
Scott-Hayward, chief fundraiser Malcolm Macaskill and several senior branch figures have all walked away from their positions to show solidarity with Monckton.
Although Ukip has had considerable success in England, the party has not made a breakthrough in Scotland.
At recent Holyrood by-elections, Inglis polled 4.83% in Aberdeen Donside and Adams secured only 3.75% in Dunfermline.
A recent trip to Edinburgh also ended badly for Farage, with the leader getting heckled in a pub by protesters and having to be bundled away by a police escort.
Scott-Hayward said: "Lord Monckton has been removed for standing up for his principles. That is wrong."
An SNP spokesperson said: "Lord Monckton, of course, famously said that Scots are 'subsidy junkies', but the problem for Ukip in Scotland isn't the messenger, it's the toxic message they're trying to sell.
"As Ukip drags Westminster politicians further and further to the right, one of the dangers of voting No in next year's referendum is of Scotland being dragged through the EU's exit door against our will."
A Ukip spokesman declined to comment.