But his downfall appeared to pave the way for his wife Grace to succeed her 93-year-old husband.
General Constantino Chiwenga had challenged President Robert Mugabe over his sacking of the vice-president.
Both Zimbabwean President Robert Mugabe's famous "blue house" and the Zimbabwean Broadcasting Corporation (ZBC) has been sealed off by heavily armed military personnel, Khuluma Afrika is reporting.
ZANU-PF said Chiwenga's stance was "clearly calculated to disturb national peace. and suggests treasonable conduct on his part as this was meant to incite insurrection".
ZANU PF Youth League leader, Kudzai Chipanga, in a statement said Chiwenga together with Mnangagwa must account for the missing money as they presided over revenue from the country's diamonds. Several tanks were seen moving near the Zimbabwean capital Harare on November 14, 2017.
Historically President Mugabe is generally afraid, and interprets any show of defiance as risk of a possible coup and has in the past tightened his personal security over simple things like social media dissent, or strikes by workers.
"When it comes to matters of protecting our revolution, the military will not hesitate to step in", Chiwenga told a press conference on Monday.
Chiwenga also vowed military intervention to stop "counter revolutionaries" who had hijacked ZANU-PF and seeking to destroy it from within.
"As a result of the squabbling, there has been no meaningful development in the country for the past five years".
Earlier this year the country was gripped by a freaky spat between Grace and Mnangagwa that included an alleged ice-cream poisoning incident that laid bare the pair's rivalry.
Despite the reports of the tanks, Zimbabwe's ruling party Zanu PF took to Twitter to deny rumours of a coup.
"Chiwenga threw down the gauntlet to Mugabe.it would make sense for Chiwenga to organise some military manoeuvres to up the ante".
Chiwenga on Monday issued a hard hitting statement urging the ruling party to stop expulsion of party members with a liberation war background.