The test was held last month to review the teachers' ability to teach.
"A total of 24 per cent teachers have failed the competency test. Out of 43,447 applicants who took the test, 32,833 teachers cleared the test," Principal Secretary (Education) Amarjeet Sinha told IANS.
The teachers were tested for knowledge of English, Mathematics, Hindi and General Knowledge for up to Class 5.
Mr Sinha said the test was to check the quality of teaching in schools following complaints of poor teaching standards.
"The test was to review their ability to teach. If they failed to clear it, the government has made it clear that they should either improve or leave teaching," Mr Sinha said.
He said for those who failed the test for the first time, there will be another chance. But those who failed for the second time would lose their jobs as per government norms.
Mr Sinha said action will be initiated after counting how many of the failed teachers have exhausted both their chances.
Bihar has been conducting such eligibility tests for school teachers since 2008.