This comes just days after Demsey was suspended after a meme was posted on Demsey's Instagram account in recent days, The Wall Street Journal reported.
The photo apparently showed a spoofed book cover of the children's show Sesame Street that contained racial slurs, including the N-word.
The text reportedly also included Covid, and featured the character Big Bird with a photoshopped face mask.
The image has since been removed.
In a memo obtained by the Journal disclosing the firing, the company said: "The decision is a result of their recent Instagram posts, which do not reflect the values of the Estée Lauder companies, have led to widespread crime, detrimental to our efforts." Promote inclusivity both inside and outside our walls, and not reflect the judgment we expect our leaders to make."
Demsey apologized for the post on Instagram last week, calling the meme racist and saying "there aren't enough words to express my regret and sadness."
Demsey has over 73,000 Instagram followers and has published over 50,000 posts.
It is not clear who will look after his duties in his absence.
Demsey serves as the chairman of the working group and oversees various brands including MAC and Clinique.
According to his LinkedIn, he was with Estee Lauder since 2006 and Mack from 1998.
US Sun contacted Estée Lauder for comment but did not immediately hear back.