Freston, who was behind the "I want my MTV" campaign when the music TV channel launched 25 years ago, has left Viacom as chairman Sumner Redstone vented his frustration at the company's perceived missed opportunities.
These include the company's failure to acquire , which was eventually sold to Rupert Murdoch's News Corp for $580m last summer.
MySpace has since gone on to become a media phenomenon in the youth market, while once trailblazer MTV has seen its star wane.
It is understood that that Redstone, Viacom's largest shareholder, and the company's board had been considering the possibility of a management change since July, and Freston's resignation paves the way for Philippe Dauman, who was Viacom's deputy chair from 1996-2000, to step in.
Dauman said: "With the [CBS] split we created a more focused, a more nimble company, poised to take advantage of all these opportunities, but now we need to do it. Now we need to be more aggressive in doing it," Dauman said.
However, according to media reports, Redstone has been more candid: "We bought a lot of little things and you can add it all up, but it's not MySpace."
In August, Viacom was linked with a reported bid for MySpace rival , which its owners and founders Michael and Xochi Birch value in the region of $1bn, representing a second chance for the company to gain ground on News Corp after losing out on the MySpace acquisition.
Viacom has denied speculation that Freston's resignation had anything to do with the termination of contract between Tom Cruise and movie studio Paramount, which is owned by Viacom, late last month, with parties describing the decision to end the partnership as mutual.
Freston's departure has prompted mixed feelings on Wall Street, with Bear Stearns analyst Spencer Wang describing colleague's reaction as "surprised and disappointed". Merrill Lynch analyst Jessica Reif Cohen predicted that Freston's resignation "is not likely to be well received by the Street or the creative community".
Redstone said: "Viacom was supposed to be the growth company and CBS was supposed to be the slow-growth company, so something was astray."
Since Freston's departure, Viacom shares have fallen from a high of $44 to yesterday's price of $35.
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