Satellite firm OHB Technology suspended Berry Smutny indefinitely and "with immediate effect," spokesman Steffen Leuthold said.
According to an October 2009 cable from the US embassy in Berlin obtained by WikiLeaks and released by Norwegian daily Aftenposten, Smutny said: "I think Galileo is a stupid idea that primarily serves French interests."
Smutny, whose firm won a €566 million ($759 million) contract to develop 14 satellites for the system, also said the project was "a waste of EU taxpayers' money championed by French interests," according to the cable.
The supervisory board of OHB "disapproves of these conversations and the quotes attributed to Mr. Smutny," said Leuthold.
Smutny has denied making the comments.
"We believe him, but the damage to our reputation was too big," Leuthold told news agency AFP.
Galileo aims to challenge the dominance of the US-built Global Positioning System (GPS) set up by the Pentagon in the 1980s, which is widely used in a huge variety of navigation devices.
Plagued by delays and cost over-runs, Galileo has an official price tag of €3.4 billion but reports have said the final cost of the system could exceed €20 billion. It is scheduled to be operational in 2014.