The review follows the sudden departure of Wal-Mart's senior vice-president of marketing communications, Julie Roehm, who has spent under a year at the company after joining from DaimlerChrysler. She had overseen the appointment of DraftFCB alongside media agency Carat USA in October.
A spokesperson for Wal-Mart has said that the decision to drop DraftFCB was "the result of new information we have received over the last few weeks".
DraftFCB will not be allowed to repitch for the work, but Carat is being invited to take part in the media review.
The decision has hit Interpublic Group's share price, which fell by 6.4% to $11.54 on the news.
Winning the Wal-Mart account was one of the few bright spots in a grim year for the advertising holding company, which included the losses of the General Motors European media account.
Interpublic is now rumoured to be a takeover target from its smaller rival, Publicis Groupe, although Publicis chief executive Maurice Levy has denied that this is the case.
Wal-Mart has said that another Interpublic agency will be allowed to pitch for the work.
DraftFCB had pitched against WPP Group's Ogilvy & Mather and Publicis Groupe's Saatchi & Saatchi in the final shoot-out for the account.
WPP's JWT, Publicis, Leo Burnett Chicago and MDC Partners' Kirshenbaum Bond & Partners also took part in early stages of the pitch process. The incumbent on the account was Omnicom Group's GSD&M.
The original review was handled by Select Resources International. Reports say that a new agency is expected to be appointed by the end of January.
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