Welsh Conservative leader Andrew RT Davies challenged First Minister Carwyn Jones over the case of Paul Thomas, who had been suspended pending an inquiry.
Mr Davies said the review had cleared him of all allegations against him.
Mr Jones said action had to be taken due to a "clash of cultures".
Sport Wales - which spends Â£22m a year promoting elite and grassroots sport - saw the activities of its board suspended in November.
Mr Thomas and vice-chairwoman Adele Baumgardt were suspended in February and then sacked by the Welsh Government last week.
Public Health Minister Rebecca Evans said there had been "an irretrievable breakdown in relationships" in the board's leadership.
During First Minister's Questions on Tuesday, Mr Davies asked: "Why did the Welsh Government decide last week to sack the chair of Sport Wales given that upon his appointment, the then incoming chair was told by a Welsh Government representative that he was entering a toxic environment, that he was tasked with tackling a dysfunctional and insular organisation?"
The first minister said: "Sport Wales was facing great difficulties, that much is true.
"There is an independent review of Sport Wales which is continuing.
"It was quite clear that the relationship between the chair and the board and the vice chair had broken down and therefore action had to be taken so the organisation could be rebuilt."
Mr Davies said the Welsh Government's second most senior civil servant, James Price, dismissed all the allegations against Mr Thomas in a letter dated February 13, which offered him a range of options which involved a continued role within the organisation.
"What happened in the very short intervening period which altered the situation and resulted in the sacking of Paul Thomas?" the Conservative leader asked.
The first minister responded: "As is known on the 14th February, the minister made a statement to assembly members on the headline findings of the review.
"One of those findings was that a clash of cultures had developed between the chair and the other board members.
"It was clear that action needed to be taken in order for the board to become fully functional in the future."
Since the sacking, Mr Thomas has hit out for being "hung out to dry" by the Welsh Government as a whistleblower.
Ms Baumgardt accused Mr Thomas of not being fit to hold senior public office, an allegation he rejected.
It has been claimed the sacked chairman of Sport Wales was warned by the Welsh Government he was entering a "toxic environment" and a "dysfunctional" organisation when he started the job.