Nixon, an Australian Broadcasting Corporation producer, was heard introducing Panesar in an Indian accent during England's tour match against the CA Chairman's XI at Treager Park.
England's left-arm spinner, who was born in Luton and is of Indian descent, is understood not to have heard the announcer's remarks.
Panesar's teammate Ian Bell said that he and the players could hear Nixon in the background but were focused on the match: "We weren't aware of it, didn't know anything about it.
"Until now, I don't think any of the team were. We were focused on the cricket.
"You could hear him through the game, but hadn't heard he'd been sacked."
The England management team have stated that they were unaware of the situation until a replacement was found for the outspoken Nixon.
"Cricket Australia deemed the conduct of the PA announcer as inappropriate and as such he will take no further part in the match," a CA spokesperson said.
Nixon had drew attention to himself during the previous day's play, opting to give the crowd a little more than they had hoped for - giving analyses of on-field action rather than doing his job and simply reading facts and figures.
It is reported that Cricket Australia were forced into telling Nixon to change his approach after he was heard aiming a jibe towards Joe Root.
The England batsman, who is expected to bat at No. 3 for the second Test, struggled with the heat in Alice Springs and called for a drink at an unexpected time.
"Joe Root calls for another drink," Nixon informed the crowd - hinting at Root's drunken bar altercation with David Warner during the summer Ashes series in England.
Mid-session drinks were soon called, with the ABC producer unrelenting in his 'banter.'
"Now it's time for everyone to have a drink - including Joe Root," he said.
The England batsman was dismissed shortly after and Nixon couldn't resist by sending a further 'hilarious' line Root's way. "You can go and have another drink now, Joe," he concluded.
The Alice Springs ABC Facebook page had, earlier in the week, asked their followers to send in their best lines on how to introduce the England team - informing them that Nixon had been given the job as the announcer and that he may use any "cheeky sledges" at the game.
"ABC Open's Dave Nixon wants your cheeky tips on how to introduce the English cricketers as they walk out to bat at Traeger Park. He's the ground announcer and might read out your cheeky sledges at the game," read the Facebook post.