"Any U.S. diplomat who acts like a high commissioner of an occupying power must learn that our tolerance also knows its limits," Wolfgang Kubicki, a deputy speaker of parliament said.
The administration is "pleased with this decision because Iran diverts its economic resources away from its people to spread violence and instability across the globe," the U.S. ambassador to Germany said.
"If people like U.S. Ambassador Richard Grenell believe they can dictate like a lord of the manor who rules in Europe and who doesn't, they can no longer remain in Germany as a diplomat."
Richard Grenell broke with diplomatic norms to say he wants to "empower" conservatives across Europe.
Richard Grenell has been accused of making threats towards German businesses over imminent U.S. sanctions on Iran.