Mr Ghosn, 64, also allegedly engaged in personal use of company assets, it said.
The Japanese automaker said that based on a whistleblower report, it had been investigating possible improper practices by Ghosn and Representative Director Greg Kelly for several months, and that it was fully cooperating with investigators.
"As the misconduct uncovered through our internal investigation constitutes clear violations of the duty of care as directors, Nissan's Chief Executive Officer Hiroto Saikawa will propose to the Nissan Board of Directors to promptly remove Ghosn from his positions as Chairman and Representative Director", Nissan said in the statement.
"Beyond being sorry I feel great disappointment, frustration, despair, indignation and resentment", Saikawa said, apologizing for a full 7 minutes at the outset of the news conference. Neither automaker has publicly spoken about the future of his roles.
The carmakers have given themselves two years to decide on a possible merger between them or find an alternative mechanism to enhance their partnership, Bloomberg News reported in July.
The French state owns 15% of Renault, which in turn holds a 43.4% stake in Nissan.
Renault shares tumbled more than 10 percent in Paris, while Nissan's German-listed securities fell nearly 10 percent.
The departure of the alliance's architect, who has been at the helm since 1999, would have been destabilizing in the best of circumstances. Ghosn remained in that post until past year.
Now Ghosn's arrest in Japan for alleged financial improprieties at Nissan could put the almost 20-year-old alliance in jeopardy.
Tokyo prosecutors confirmed in a statement on Tuesday that they had arrested Ghosn the previous day over allegations of financial misconduct.
He is credited with transforming the company from near-bankruptcy to profitability within two years and steering the auto maker into an expansion in China, one of Nissan's key markets by volume.
A French citizen, Ghosn also was credited with helping French carmaker Renault become profitable through cost-cutting measures and new products like electric cars.
Speaking at Nissan's headquarters in Yokohama, Saikawa said the company's management will focus on minimising the impact of the shake-up on the company and its employees.
Speaking on the sidelines of a eurozone finance ministers' meeting in Brussels, French Finance Minister Bruno Le Maire said the government would "do everything as a shareholder represented on Renault's board to ensure operational continuity and stable governance at Renault".
Shareholders at Renault voted in 2016 against Ghosn's pay package, seeing it as too generous - but the board ignored the vote.
A spokesman for Renault also declined to comment.
Ghosn officially still leads the Renault-Nissan-Mitsubishi alliance as CEO and chairman. That opens up a leadership void at the entire alliance, for which Ghosn officially still serves as CEO and chairman.
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