"This majority does not exist anymore, this centre left is finished," Mastella told a news conference.
Mastella stepped down as justice minister last week after he and his wife came under investigation for corruption.
At the time, Mastella said his party would provide "external" support to the government.
Prodi's office had no immediate comment, but a government source said the prime minister had called crisis coalition talks for 9pm (2000 GMT).
Weakened Prodi
Prodi's government has had a rollercoaster ride since coming to power in May 2006, after the closest election in modern Italian history.
Prodi, weakened by infighting in his Catholic-to-communist coalition, briefly tendered his resignation last year, but no major ally has previously withdrawn support altogether.
The loss of Udeur means that his coalition can no longer count on a majority of elected politicians in the senate.
Mastella's party has three seats in the senate, where Prodi had a two-seat majority.
Prodi could still win key votes in the upper house with the support of seven unelected lifetime senators, but they have not yet guaranteed their support on any particular issue.