Continuity mistake: 8-9 "Retire in Sunny Hawaii - Forever": When Danno leaves his car, he's wearing a brown suit, but he enters Ellen's office wearing a black one.
Continuity mistake: 8-13 "A Touch of Guilt": The assault is said to have occurred at the Zanza Bar. But when we see the location, the bar is called The Makai Lagoon Club instead.
Continuity mistake: 8-15 "Deadly Persuasion": Danny says he hasn't fired his old 45 automatic "since I got out of the service." But at least two previous episodes had established that he joined Five-O right out of college, and was never (not even before college) in the service.
Answer: He was fired. He never really appreciated his character. He felt Kono was portrayed as a big dumb Hawaiian and that the stereotype was racist. He also felt underutilized. He was fired after a heated argument with the show's publicist regarding his character. It seems there's not much details given regarding the incident or the firing, so it's seems possible he upset the show's producers as well.
Bishop73
No he said something derogatory about one of the Jewish producers that's why he was fired.