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He has been replaced by AICC General Secretary Janardan Dwivedi, who had been holding the charge earlier, party sources said on Saturday.
The removal of Moily is believed to be due to the displeasure of the party high command over his remarks against the Bihar Chief Minister, who was sought to be wooed by party leader Rahul Gandhi.
Moily had on Friday said that Congress is not going to "make a hero" of Nitish Kumar.
"I do not thing Congress is going to make a hero of Nitish Kumar, the manner in which he has aligned with BJP and is carrying on...that kind of pollution of his secular credentials with the communal," Moily had said.
When asked about the Congress decision to relieve him of his charge as AICC media head, Moily, who is in Bangalore, merely said that he had given the charge to Dwivedi as he would be away in Karnataka till May 17.
Moily is contesting elections from Chikkballapur in Karnataka.
In a flip-flop yesterday, the AICC media head had first attacked Railway Minister Lalu Prasad and LJP Chief Ramvilas Paswan in the wake of reports that they were boycotting the meeting of the union cabinet but later softened to say that they were part of the UPA and would be back in a UPA government.
The sources said Moily had exceeded his brief on earlier occasions too and had created an awkward situation for the party.
Moily, who had been the party's media department chief for quite some time, had handed over the charge to Dwivedi last month when he went to Karnataka and had resumed the responsibilities only last week.