Last week, Energy & Minerals chief Davies and Legal & Regulatory Affairs group executive Valentine were suspended over the discovery of $US10.5 million in payments made to a consultant over the Simandou iron ore project in Guinea.
Rio's board reviewed the findings to date of an internal investigation into 2011 contractual arrangements with the consultant.
"The board's decision does not pre-judge the course of any external inquiries into this matter," Rio said.
"However, the board concluded that the executives failed to maintain the standards expected of them under our global code of conduct, The way we work. In the circumstances, the board terminated the contracts of both executives."
Davies and Valentine won't be eligible for any short-term incentive plan awards for 2016 and all unvested incentive plan awards from previous years will be cancelled.
In a statement, Davies said the decision had come as a "great surprise and disappointment" and there were no grounds for the termination.
"I have not been privy to Rio Tinto's internal investigation report, nor have I had any evidence of the reasons for my termination of my employment given," he said.
"Rio Tinto has made no effort to abide by due process or to respect my rights as an employee and it has given me no opportunity to answer any allegations.
"This treatment of me and my past and recent colleagues is totally at variance with the values and behaviours of the company to which I have devoted my professional life.
"My rights are fully reserved, and I have been left with no option but to take the strongest possible legal action in response."
Australian-born, London-based Davies was one of the company's most senior executives and was considered to be one of the leading candidates to take over from former CEO Sam Walsh before J-S Jacques got the job.
He had been with Rio since 1997, leading the Iron Ore and Diamonds & Minerals businesses before taking on his current role.
Davies will be replaced by Rio managing director of Marine and vice president of iron ore sales and marketing Bold Baatar, who will join the executive committee.
"Appointing Bold to run our Energy & Minerals business will add a fresh perspective to the product group," Jacques said.
"Bold brings broad international and executive experience in a wide range of commercial disciplines.
"He has a proven track record and will be a great addition to our ExCo, particularly with his strong strategic approach and acute understanding of Asia."
Valentine, who had been with Rio since 2008, was due to step down early next year.
Chief financial officer Chris Lynch will take on her responsibilities while a replacement is sought.
Rio has contacted UK, US and Australian regulatory authorities regarding the matter and will fully cooperate with any investigations.
Shares in Rio opened slightly lower, but last traded 0.2% higher at $A57.08.