The dissolution of the Chitungwiza executive comes barely a month after the party dismissed former Chitungwiza mayor Israel Marange on the same charges.
MDC-T spokesperson Nelson Chamisa said Marange would no longer represent the party in the municipality.
In a statement of resolutions passed after the meeting, the party also noted that the decision to fire the Chitungwiza executive was meant to arrest the growing behaviour of corruption in the party.
"The Party condemns all forms of corruption within and outside its structures and Council hereby endorses the dissolution of the Chitungwiza Provincial Executive and the suspension of the UK External Assembly," reads part of the resolutions.
The 20-member executive led by Martin Magaya was under probe on charges of corruption since the beginning of this month.
The national council meeting also set its time frame for the implementation of all outstanding issues arising from the Global Political Agreement.
"The post-Maputo dialogue must be completed as soon as possible and in any event by no later than 15 January 2009. In the event of a deadlock after this date, the matter will be referred back to Sadc for arbitration and adjudication," reads the statement.
The suspension of the Jonathan Chawora-led UK executive follows allegations that some of its members were abusing funds raised for the party.
It is alleged that they were channeling the funds to certain strategically placed members in Zimbabwe as a means of "buying" positions in the power-sharing government.
Those suspended include Mr Standford Biti, brother to Finance Minister Tendai Biti, Mr Morgan Mutasa, Mr Peter Nyoni and Ms Suzeet Kwenda.