The director had "criticised the humanitarian engagement of many German theatres, including Thalia Theatre, for refugees, and therefore did not want to be associated with it."
Hermanis had also argued, according to the theatre, that "not all refugees are terrorists of course, but all terrorists are refugees or their children".
He reportedly also said everyone had to take a side in the current "war" sparked by the November 13 Paris jihadist attacks and that "the time for political correctness is over".
Thalia`s director Joachim Lux condemned what he called a "political cancellation".
It "shows... how Europe is currently deeply divided," Lux said, adding that "it is worrying and shocking that this divide has also affected the cultural world."
Hermanis, born in 1965 in Riga, is currently directing Berlioz`s "The Damnation of Faust" at the Paris Opera.
The Thalia is going ahead with the staging of "Spaete Nachbarn" ("Late Neighbours") opening next week, with Hermanis originally slated to direct the show.
However, both sides have agreed to cancel the play "Russland. Endspiele" ("Russia. Endgames") which had been due to premiere in April 2016 at the Thalia in the northern port city of Hamburg.
The Thalia, like many other German cultural institutions, has organised activities in support of the record influx of asylum seekers who have arrived in Europe`s biggest economy.
Germany is expected to record around one million asylum seeker arrivals in 2015.
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