Russia's President Dmitry Medvedev has fired two top space officials and reprimanded the space agency chief.
The move came after an inquiry into the failed launch of a rocket with communications satellites showed it was lost owing to a fuel miscalculation.
The satellites were to have been part of a satellite-navigation system known as Glonass, a Russian rival to the American GPS network.
They were disposed of after the rocket came down in the Pacific Ocean.
The deputy head of the Russian federal space agency Roscosmos, Viktor Remishevsky, was dismissed and its chief Anatoly Perminov reprimanded.
Vyacheslav Filin, the deputy president of the space rocket corporation Energia, was also sacked.
The failed launch occurred when the Russian Proton-M rocket, carrying three Glonass-M satellites, blasted off from the Russian-leased Baikonur cosmodrome in Kazakhstan on 5 December 2010.
The rocket, however, failed to reach orbit and the high-tech satellites were disposed of in the Pacific Ocean off the US state of Hawaii.
President Medvedev immediately ordered an investigation into the accident and a government commission concluded that it was caused by a fuel miscalculation that essentially made the rocket too heavy to reach orbit.
The Kremlin says it was the findings from the inquiry that moved Mr Medvedev to make the changes.
Russia has struggled to place a sufficient number of Glonass satellites in orbit to compete with the US.