A ZCU statement on Monday said the players had violated a 21-day breach clause in their contracts by not returning to work by May 7.
The decision was taken at a ZCU board meeting earlier in the day.
The dispute started on April 2 when Streak's tenure as Zimbabwe captain ended after he questioned the composition of the selection panel.
Fourteen other white players allied themselves with Streak, and the group demanded arbitration on his removal from the captaincy, the composition of the selection panel and alleged poor conduct of ZCU officials.
The ZCU's decision to fire the players reached them while they were meeting with their lawyer to draft their agreement to the board's offer of mediation to resolve the dispute.
"We were talking about officially accepting mediation and we were going to make ourselves available for practice," Stuart Carlisle, one of the rebels, told Reuters.
"Then we got a phone call to say our contracts have been terminated."
Carlisle said the ZCU did not appear to have acknowledged that the players suspended their boycott last week and made themselves available, albeit temporarily.
"They did not accept that we remedied our original breach of contract when we went back to practice last week," he said.
Carlisle said the ZCU had demanded that the players return their sponsored vehicles by Wednesday and would pay them until Friday.
Carlisle said the dispute could end up in the civil courts.
"If they sue us, we will definitely counter-sue," Carlisle said. "We feel we have a very strong case, and we're going to get an advocate involved."
The dispute led to Zimbabwe selecting an inexperienced squad for the one-day series against Sri Lanka, which the visitors won 5-0.
A team drawn from a similar squad lost the first Test by an innings and 240 runs on Saturday.
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