Hazare made a controversial call as he shot down a run-out appeal made by RR players against Daredevils skipper Pietersen without referring to third umpire, even though TV replays appeared to show that the Englishman was out of his crease.
IPL chairman Ranjib Biswal said Hazare, 53, will not be umpiring any more matches for the rest of the tournament.
"He has been removed. There are many reasons," Biswal was quoted as saying by Cricinfo.
Hazare, who has officiated in 17 IPL matches, later officiated as the third umpire when Mumbai Indians faced Royal Challengers Bangalore at the Wankhede Stadium on May 6, which has turned out to be his last game.