A devout Christian who has made 73 international appearances for the Wallabies, Folau was found guilty of a code of conduct breach last week, following a homophobic social media post, which listed "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters," reading underneath, "Hell awaits you."
The controversial Instagram post in April has not been deleted.
A three-person tribunal decided on Friday that Folau's contract with Rugby Australia should be terminated.
"This is a decision that will change the landscape for sport in Australia and possibly across the world ... we wanted to make sure we took the time to get the decision right," said Rugby Australia chief executive officer Raelene Castle.
Folau's multi-million dollar contract with Rugby Australia would have run until 2022, but the ruling effectively ends his rugby career.
The 30-year-old has 72 hours to appeal the decision.
More to follow.
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